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Two Extradited from Singapore in Connection with Plot to Illegally Export Military Antennas
Two foreign nationals, Hia Soo Gan Benson (Benson Hia) and Lim Kow Seng (Eric Lim), have been extradited from Singapore to stand trial in the District of Columbia in connection with an alleged fraud conspiracy involving the unlawful export of military antennas from the United States to Singapore and Hong Kong. The indictment, originally filed on June 23, 2010, also alleges that the ultimate object of a second conspiracy was to conceal from the U.S. Government that the true destination of another set of antennas was Iran.
According to the indictment both Benson and Seng are charged with 6 criminal counts. Two of the counts are distinct conspiracy charges. The first conspiracy relates to the defendants’ roles in procuring antennas from the United States that were eventually shipped to Iran through Singapore, Malaysia, and Thailand. The second conspiracy relates to the defendants’ roles in procuring a different kind of antenna from the United States without first applying for a license from the State Department’s Directorate of Defense Trade Control (DDTC).
In relation to the above-mentioned conspiracies, the defendants have also been charged with one count of false statements (18 U.S.C. 1001) in connection with license applications filed with the Bureau of Industry and Security (BIS), one count of false statements (18 U.S.C. 1001) in connection with statements made to Customs and Border Protection (CBP) in the second conspiracy, one count of smuggling (18 U.S.C. 554) in connection with the second conspiracy, and one count of illegally exporting controlled products with DDTC licenses (22 U.S.C. 2778) in violation of the Arms Export Control Act (AECA).
With regards to the defendants’ specific cases, it may be important for defense counsel to explore whether the two distinct counts of conspiracy are superfluous, especially given the similar conduct and goals involved with both conspiracies. If a review of discovery actually unveils the two conspiracies to in fact be one large conspiracy, defense counsel may decide to move the court to dismiss one of the conspiracy counts.
More telling however, is the U.S. Government’s continued focus on prosecuting export related crimes. This is also consistent with what many people in this field have been dicussing. For example, in 2008 the Department of Justice formed the Export and Anti-proliferation Global Law Enforcement (EAGLE) Task Force. The goal of this task force was to bring together the different federal agencies focused on counter-proliferation work and allow them to share resources and knowledge in this complex area, as well as increase the number of prosecutions in this area.
This level of coordination of resources and increased focus by the federal government requires defense counsel to be even more vigilant. Protecting a defendant’s Constitutional rights becomes even more important because many of the federal agencies working together in this task force may not be familiar with rights afforded criminal defendants because they are civil administrative bodies, and not law enforcement agencies. Moreover, many foreign nationals may not be familiar with the rights afforded to defendants in the U.S. criminal justice system. As such, advising foreign clients to assert their Fifth Amendment rights at various stages of an investigation (including extradition) becomes even more critical in this new era of federal coordination in export control cases.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.
Texas Man Accused of Falsely Billing Medicare and Medicaid is Arrested
Lawrence T. Taylor, the Defendant, has been indicted on charges of health care fraud and conspiracy to commit health care fraud. The indictment, returned on Wednesday December 12, 2012 in the Southern District of Texas, formally charged the Defendant with the following nine counts:
Count (1) – 18 U.S.C. 371 – Conspiracy to commit health care fraud in violation of 18 U.S.C. 1347; and Conspiracy to violate the Anti-Kickback statute in violation of 42 U.S.C. 1320a-7b(b)(2)(A); and
Counts (2)-(9) – 18 U.S.C. 1347 – Health care fraud.
Like in most federal indictments, the Defendant is charged with a combination of substantive offenses (8 counts of actual health care fraud) and the inchoate offense of conspiracy (for entering into an agreement to commit health care fraud and violate the Anti-Kickback statute).
By charging the Defendant with conspiracy the Government is able to thoroughly describe the background story leading up to the substantive fraud offenses. This is because the “overt acts” of a conspiracy can be as benign as incorporating a business or leasing office space, if those acts were indeed undertaken to further the criminal goal of the conspiracy. In this case the Government lists the Defendant’s formation of 1866ICPAYDAY.COM LLC, his leasing of office space, and his registration of a d/b/a all as overt acts in furtherance of the conspiracy, effectively casting the Defendant’s otherwise normal business activities as criminal acts.
Additionally, by charging the defendant with conspiracy, the Government can also significantly increase the loss amount of the alleged fraud. Unlike specific instances of fraud, a conspiracy can last for many years and encompass all of the acts of a defendant, criminal or otherwise. In essence, it gives the Government broad discretion to use as many of the Defendant’s own actions against him. As such, the Government is able to increase the loss amount to $1,238,823.85 when the 8 specific counts of fraud in the indictment only add up to $24,065.60.
If the Defendant is eventually convicted of an offense, defense counsel should argue for a lesser loss amount at sentencing, especially if some of the Defendant’s claims to Medicare and Medicaid were in fact legitimate. Pushing back against the Government’s asserted loss amount is critically important at sentencing because an increased loss amount correlates directly with an increased sentence according to the U.S. Sentencing Commission’s Guidelines Manual.
Depending on how much of the Defendant’s business activities are eventually proven to be fraudulent, defense counsel may also have the opportunity to argue against the “willfulness” element of the fraud counts. Isolated instances of medically unnecessary claims to Medicare or Medicaid can be cast as legitimate mistakes, instead of criminal acts. To determine whether the Government’s allegations are broader than what is reflected in reality requires defense counsel to thoroughly review the Defendant’s business and patient records. Upon this review, defense counsel will be able to effectively compare the Defendant’s version of the facts against the Government’s allegations.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrariassociatespc.com.
Lawyer for Indian Tribe and Three Others Indicted for Casino Bribery Scheme
An attorney for the Twenty-Nine Palms Band of Mission Indians is among four people who have been indicted on federal bribery and money laundering charges for allegedly participating in scheme in which associates of the lawyer hired to provide assistance to the tribe paid kickbacks to the attorney.
The 48-count grand jury indictment returned Wednesday afternoon names Gary Edward Kovall, 66, of Ely, Minnesota, a licensed California attorney who acted as legal counsel for the tribe; David Alan Heslop, 74, of Templeton, who, on Kovall’s recommendation, was hired by the tribe to oversee some tribal business; Paul Phillip Bardos, 57, of Rancho Cucamonga, a general contractor; and Peggy Anne Shambaugh, 56, of Ely, Minnesota, who is Kovall’s wife.
Arraignments are set for today in the United States District Court in Los Angeles. The indictment has not been posted publicly as of yet.
According to the press release, Kovall advised the tribe to create a limited liability company to purchase real estate, and the attorney allegedly convinced the tribe to hire Heslop as the company’s manager. Kovall and Heslop then recommended that the tribe hire Bardos to act as the tribe’s “owner’s representative” in several construction projects at the Spotlight 29 Casino. Allegedly, when additional construction or construction oversight became necessary in relation to casino projects, Bardos submitted proposals to perform the work, and Kovall persuaded the tribe to give Bardos the contracts. After being paid by the tribe, Bardos allegedly paid kickbacks to Heslop who, in turn, paid kickbacks to Kovall through Shambaugh.
As far as the financial aspect of the alleged scheme, the press release only cites to one instance in 2007, when Bardos allegedly paid Heslop more than $186,577 which was then funneled to Shambaugh.
Although the indictment has not been made public yet, it is interesting to note that Twenty-Nine Palms Enterprises has been involved in two civil suits in the past, and Twenty-Nine Palms Band of Mission Indians has been involved in five civil suits. One of the civil lawsuits was apparently between Twenty-Nine Palms Enterprises and Cadmus Construction, Inc., which is owned by Bardos. Cadmus Construction brought the suit against Twenty-Nine Palms Enterprises in 2010 to recover payment for construction work that Twenty-Nine Palms was refusing to pay.
Without access to the indictment, there is no telling how or why the federal government began to investigate the relationship between Twenty-Nine Palms and the four individuals who have been criminally indicted. Perhaps the earlier civil lawsuit between Bardos and Twenty-Nine Palms led to the federal investigation after issues regarding payment was brought up. Regardless, the four individuals now face serious federal criminal charges and if convicted, might face federal prison and significant fines.
All four individuals have been indicted with conspiracy. Additionally, Kovall, Bardos, and Shambaugh are charged with eight counts of bribery, while Heslop is charged with 16 counts of bribery. In addition to the conspiracy and bribery charges based on the kickback scheme, Bardos is charged with eight counts of money laundering, Heslop is charged with seven counts of money laundering, and Shambaugh is charged with two counts money laundering.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Accused Member of Foreign Terrorist Organization Extradited to United States on Hostage Taking Charges
The Department of Justice announced on March 12, 2012 that Alexander Beltran Herrera, a/k/a Jhon Beltrain Herrera, a/k/a Rodrigo Pirinolo, an accused member of the Revolutionary Armed Forces of Colombia (“FARC”), has been extradited from Colombia to face hostage taking and terrorism charges in the United States.
The indictment alleges that the FARC is an armed and violent organization in the Republic of Colombia. The indictment further alleges that the FARC is a “highly structured criminal organization” divided into seven geographic “blocks” — the Caribbean block, the Northwestern block, the Middle Magdalena block, the Central block, the Eastern block, the Western block, and the Southern block — which are each further subdivided into a number of Fronts and named Mobile Columns. The indictment specifically alleges that Mr. Herrera was a member of the 27th Front in the FARC’s Southern block and committed various crimes against the United States as a member of FARC.
For example, according to the indictment, in 2004 the 27th Front allegedly held three Americans for nearly two years. The indictment also alleges that Mr. Herrera was one of the FARC “jailers” who used “choke harnesses, chains, padlocks, and wires to bind the necks and wrists” of American hostages. In addition to these alleged acts, Mr. Herrera was charged with the following specific offenses: 18 U.S.C. 1203(a) (Conspiracy to Commit Hostage Taking); 18 U.S.C. 1203(a),(2) (Hostage Taking; Aiding and Abetting and Causing an Act to be Done); 18 U.S.C. 924(c),(2) (Using and Carrying a Firearm During a Crime of Violence; Aiding and Abetting and Causing an Act to be Done); 18 U.S.C. 2339A (Conspiracy to Provide Material Support to Terrorists); 18 U.S.C. 2339B (Conspiracy to Provide Material Support or Resources to a Designated Foreign Terrorist Organization).
When an individual located in a foreign country has been indicted by a federal grand jury the United States will attempt to compel the government of that country to turn that individual over into the custody of the United States. This request will usually be pursuant to an extradition treaty between the United States and that foreign country. The extradition request is formally made with the foreign government’s embassy in the United States. Additionally, this formal request is made by the U.S. Department of State, not Justice. The U.S. will likely accompany this formal request with a copy of the indictment, arrest warrant, relevant statutes, a photograph of the accused, and the affidavit of an investigating officer on the case.
When this request is made, the terms of the treaty dictate whether the foreign government will agree to turn over the individual into the custody of the United States. Accordingly, most extradition treaties must satisfy a legal concept known as dual criminality. Dual criminality means that the offenses being charged by the requesting country must also be considered punishable offenses in the other country. This very requirement exists in Article 2(1)(a) of the extradition treaty between the United States and Colombia.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Humboldt County Marijuana Grower Indicted for Murder by Feds
It was announced on March 1, 2012 that a federal grand jury in San Francisco indicted Mikal Xylon Wilde, of Humboldt County, with murder during a narcotics offense, conspiracy to manufacture and distribute 1000 or more marijuana plants, use of a firearm during and in relation to a drug trafficking offense and crime of violence, use of a firearm causing death in the form of a murder, and possession of ammunition by a convicted felon.
These federal offenses are being charged separately and in addition to California’s own charges against Wilde. As such, the defendant is currently in custody in Humbodlt County on state murder charges arising from the incident. An unfortunate, yet common, trend in drug related offenses are concurrent state and federal investigations and prosecutions for the exact same conduct. In essence, the defendant can lawfully be tried twice for the same conduct. The doctrine of double jeopardy does not apply in instances of concurrent federal and state prosecutions because both the federal government and state government are distinct sovereigns. This concept, known as dual sovereignty, permits any number of sovereign entities to separately prosecute a person if the person’s action violates the laws of each sovereign entity.
Wilde pleaded not guilty to state charges back in September 2011 and his case is ongoing. However, in line with the concept of dual sovereignty, Wilde was indicted for federal offenses in March 2012. Murder is generally considered an offense best handled by state governments. But since Wilde’s offense involves large scale narcotics trafficking, the federal government probably thought it would be prudent to pursue the case as well. The defendant will make his initial appearance in federal court in Eureka before U.S. Magistrate Judge Nandor J. Vadas.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Former Executive at Gourmet Foods Company Sentenced to 30 Months in Prison for Embezzling Over $1 million from Her Employer
In the Central District of California, a woman was sentenced on February 13, 2012 for embezzling more than $1 million from her employer, a Santa Barbara-based gourmet food company. Lisa Sackie, 48, was sentenced by United States District Judge George H. Wu, who also ordered the defendant to pay $1.1 million in restitution to Future Food Brands, the parent company of Santa Barbara Bay Foods.
Sackie pleaded guilty to two counts of mail fraud in August of 2011, admitting that she wrote company checks to herself and to pay for personal expenses. Sackie pleaded to an information, and subsequently waived her right to a grand jury indictment. Sackie’s decision to plead to an information and waive her right to an indictment likely benefited her in sentencing because she admitted guilt early in the process and saved government resources. In fact, according to her sentencing memorandum and the sentencing guidelines, Sackie was facing a sentencing range of 33 to 41 months. Accordingly, Sackie was sentenced to 33 months in prison, the very bottom of her recommended sentencing range. Although her attorneys’ request for a variance of 33 months of probation was denied, Sackie benefited from cooperating, as reflected in the judge’s determination to sentence her at the bottom of the applicable range.
According to the plea agreement the government agreed to bring no additional charges against the defendant based upon her scheme to defraud her employer. Thus, instead of facing a multitude of fraud counts, Sackie only faced the maximum penalty of two fraud counts. Had Sackie not agreed to a plea agreement early on, the government would have likely convened a grand jury and charged her with a multitude of fraud counts dating as far back as 2004, which is when the government alleges Sackie’s scheme to defraud had begun. Depending on the full extent of the circumstances a defendant faces, it may be prudent to plea early, much like Sackie, and not put the government to its constitutional burden of proving a case.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Switzerland’s Oldest Bank Indicted on U.S. Tax Charges
The US Attorney’s Office for the Southern District of New York recently announced the first ever indictment of a Swiss bank. The indictment, returned by the grand jury and unsealed on February 2, 2012, alleges that Wegelin & Co. conspired with US taxpayers and others to hide from the Internal Revenue Service (IRS) more than $1.2 billion in secret assets and the income these accounts generated.
Concurrent with this indictment, the US government seized more than $16 million from Wegelin’s correspondent bank account in the United States, in accordance with a civil forfeiture complaint and seizure warrant. Wegelin is charged in a superseding indictment with Michael Berlinka, Urs Frei and Roger Keller, three client advisers at the bank who were previously charged with the same conspiracy.
The government alleges that the defendant’s conspiracy in this case corresponds with Swiss banking giant UBS’ announcement on or about July 17, 2008 that it was closing its US cross-border banking business. UBS thereafter began notifying clients that they could continue to maintain undeclared accounts at Wegelin and certain other Swiss private banks. It was at this time that Wegelin’s executive committee, including its managing partners affirmatively decided to capture the illegal US cross-border banking business lost by UBS by opening new undeclared accounts for US taxpayer clients fleeing UBS.
The defendants in this case are currently only charged with conspiracy. However, their alleged conduct in the indictment could open them up to various other offenses. For example, the indictment alleges the transmission of a long list of checks and wire transfers from Wegelin to US taxpayers for the purpose of repatriating funds from these undeclared accounts. This list of transactions shows that most of the amounts transferred were under the $10,000 reporting requirement and sent to the same recipient over relatively short periods of time. Such behavior, if proven to have been undertaken to evade reporting requirements, is known as structuring, or “smurfing,” and is prohibited under the anti-structuring statute. The indictment also alleges that Wegelin instructed clients to carry cash and to avoid taking more than $10,000 with them on international flights, all to allegedly avoid reporting requirements. According to the statute, each such transaction can be charged as a separate and distinct offense. Therefore, defense counsel will have to take into consideration the possibility of a multi-count superseding indictment against the defendants when negotiating with prosecutors.
Another interesting observation for defense counsel to consider is the fact that the US taxpayer clients are identified as co-conspirators but have not yet been named as defendants themselves. These unindicted co-conspirators might have provided the US government with information about Wegelin’s alleged wrongdoing in exchange for proffer letters or non-prosecution agreements. Alternatively, the government may have merely agreed to delay the return of any such indictments to see how cooperative or useful these co-conspirators prove to be against Wegelin. When weighing the multitude of factors impacting the defendants’ decisions to accept plea agreements, defense counsel should recognize that all such witnesses will be particularly susceptible to cross-examination should this case go to trial.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Former CIA Officer John Kiriakou Charged for Disclosing Classified Information to Journalists, False Statements, and Revealing the Identity of a Covert Officer
The U.S. Attorney’s Office for the Eastern District of Virginia recently announced that it has charged John Kiriakou with repeatedly disclosing classified information to journalists, including the name of a covert CIA officer and information revealing the role of another CIA employee in classified activities. Specifically, Kiriakou has been charged with one count of violating the Intelligence Identities Protection Act and two counts of violating the Espionage Act. Kiriakou was also charged with one count of making false statements for allegedly lying to the Publications Review Board of the CIA in an unsuccessful attempt to trick the CIA into allowing him to include classified information in a book he was seeking to publish.
Upon conviction, the count charging illegal disclosure of a covert officer’s identity to a person not authorized to receive classified information carries a maximum penalty of five years in prison, which must be imposed consecutively to any other prison term; the two counts charging violations of the Espionage Act each carry a maximum term of 10 years in prison; and making false statements carries a maximum prison term of five years. Each count carries a maximum fine of $250,000.
Being that the allegations against Kiriakou are in the form of a criminal complaint, the government’s next step will be to initiate and conduct a grand jury investigation, if they have not already done so. Since grand jury investigations are secret, the government could have already begun such an investigation and interviewed various witnesses involved in the offenses above. The grand jury investigation will determine whether there is probable cause to indict Kiriakou before arraigning him and is generally required in the federal criminal justice system, unless waived by the defendant. If Kiriakou waives his right to a grand jury investigation the prosecution can alternatively proceed by filing an information.
There are several reasons why a defendant would agree to waive his right to a federal grand jury investigation and its determination of probable cause. Since grand jury investigation are ex parte proceedings (held only by the prosecution) they tend to conclude with a finding of probable cause. Additionally, if the defendant has previously spoken to prosecutors he may have already negotiated a favorable plea agreement that would only be available to him at these early stages of the prosecution. The defendant may also want to reduce the risk of uncovering additional offenses that would necessarily be uncovered if a grand jury investigation was commenced. Whatever the reason, the steps moving forward are highly personal and will be ultimately determined by the defendant after close consultation with and advice from defense counsel.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
U.S. Attorney’s Office for the Southern District of New York Announces Extradition of Four Israeli Defendants Charged in Multi-Million Dollar Fraud Scheme
The US Attorney for the Southern District of New York recently announced that four defendants have been extradited from Israel on charges relating to their participation in multiple lottery telemarketing fraud schemes. Many of those charged in two indictments in 2008 and 2009 have already been arrested and have either plead guilty to conspiracy and/or fraud charges or been found guilty by bench trial.
The four recently extradited include Avi Ayache, Yaron Bar, and Ian Kaye, all of whom were arrested in Israel back in July of 2009 awaiting extradition to the United States. The fourth man, Shai Kadosh, who was indicted back in September 2008 was a fugitive until he was arrested in Israel in December of 2011.
The four men and their co-conspirators allegedly operated phony “lottery prize” schemes out of numerous boiler rooms in Israel. The schemes targeted hundreds of victims, mostly elderly, throughout the United States. To identify potential victims, the defendants purchased from list brokers the names and contact information of U.S. residents who subscribed to sweepstakes lotteries. They then contacted the victims and solicited information about their finances by falsely telling them they had won a substantial cash prize that they would receive as soon as they paid the necessary fees and taxes. In reality, there was no lottery prize. Collectively, the American victims in these lottery fraud schemes lost approximately $25 million.
Ayache, Bar, Kaye, and Kadosh are each charged with one count of conspiracy to commit wire fraud and mail fraud through telemarketing, which carries a maximum penalty of 30 years in prison. In addition, Ayache, Bar, and Kadosh are each charged with two substantive counts of wire fraud through telemarketing, each of which carry a maximum potential penalty of 30 years in prison. Ayache and Bar are also charged with conspiracy to commit money laundering, which carries a maximum potential penalty of 20 years in prison. The enhanced fraud penalties are a result of the telemarketing scheme employed by the defendants. According to 18 U.S.C. 2326 there is up to a 10 year penalty enhancement when the fraud is carried out by telemarketing and targets at least 10 elderly people over the age of 55.
The government will also seek forfeiture and mandatory restitution of up to $25 million in substitute assets to recover the defendants’ ill-gotten gains.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Former Investment Fund Manager from Los Angeles Charged with Defrauding Investors
John Farahi, of Bel Air Estates, California, was named in a 41-count indictment returned on December 7, 2011 by a federal grand jury. The former investment fund manager defrauded investors out of millions of dollars by falsely promising investors their money would be invested conservatively to purchase corporate bonds backed by the Troubled Asset Relief Program (TARP) and then collaborating with his corporate counsel to cover-up the fraud.
Farahi, a former Reno, Nevada City Council Member and Farsi-language radio investment advisor, instead used the investment funds for a variety of personal purposes, including to support his family’s lavish lifestyle, to make Ponzi payments to early clients of his investment fund, and to trade in high-risk and speculative future options trading. Farahi was able to attract many of his clients through his daily radio show in which he touted a conservative investment philosophy. Most of his clients were members of the Southern California Iranian-Jewish community.
In the face of huge trading losses at the end of 2008, Farahi allegedly tried to extend the scheme by drawing down extensively on lines of credits at banks while making false statements to those banks about his financial condition. The victim banks included TARP recipients Bank of America and U.S. Bank as well as Sun West Bank.
The indictment charges Farahi with 16 counts of mail fraud, one count of wire fraud, five counts of offering for sale unregistered securities, four counts of loan fraud, one count of aggravated identity theft, five counts of alteration of documents, one count of suborning perjury, one count of concealing a material fact, one count of witness tampering. If he is convicted of the 40 counts in which he is charged, Farahi would face a statutory maximum sentence of 717 years in federal prison.
It is alleged that Farahi’s scheme lasted from 2005 until 2010. The Securities Exchange Commission (SEC) had filed a federal complaint alleging violations of federal securities laws against Farahi and other in January 2010. Many of the charges Farahi now faces are derived from his attempts to mislead, conceal, and redirect the SEC’s investigation. Otherwise known as cover-up crimes, targets of federal investigations often get themselves into more trouble early on in an investigation by lying to investigators or acting unethically. Now that the SEC has referred the case to the DOJ for criminal prosecution, Farahi now faces a significant number of charges in addition to his initial fraud scheme.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
