A federal judge Thursday sentenced the former Rutherford County Sheriff Chief Deputy of Administration to 15 months in prison for operating a private electronic cigarette company in the county jail for personal gain, officials announced.
Joe L. Russell II, 50, of Murfreesboro, Tennessee, was also ordered to pay $52,500 in restitution and to forfeit $52,234.41, an amount equal to all proceeds he received from JailCigs.
Russell, along with former Rutherford County Sheriff Robert F. Arnold, 41, of Murfreesboro, Tennessee, and Arnold’s uncle, John Vanderveer, 59, of Marietta, Georgia, were named in a 14-count indictment in May 2016 charging them with honest services fraud, mail fraud, wire fraud, bribery concerning federal programs, extortion under color of official right, obstruction of justice and conspiracy.
According to his plea, Russell admitted to the following allegations:
- Forming JailCigs along with Arnold and Vanderveer in 2013
- Using Arnold’s official position as Sheriff of Rutherford County to benefit JailCigs by allowing the company’s electronic cigarettes to come into the Rutherford County jail as non-contraband and to be distributed by county employees
- Taking steps to disguise their involvement in the company
- Misrepresenting the benefits that Rutherford County was supposedly receiving from JailCigs.
Arnold pleaded guilty in January 2017 and was sentenced in May 2017 to four years and two months in prison and ordered to pay $52,500 in restitution and to forfeit $66,790.
Vanderveer was sentenced in September 2017 to one year plus one day in prison for attempting to tamper with a key witness in the investigation by asking her to destroy incriminating documents related to the scheme.
Vanderveer was ordered to pay $52,500 in restitution.
Four San Diego-area nursing homes owned by Los Angeles-based Brius Management Co. have agreed to pay as much as $6.9 million to resolve civil allegations that their employees paid kickbacks for patient referrals and submitted fraudulent bills to government health care programs.
The settlement with the four nursing homes resolves an investigation into allegations that their employees paid kickbacks to discharge planners at Scripps Mercy Hospital San Diego to induce patient referrals to the nursing homes in violation of the federal Anti-Kickback Statute.
The investigation examined additional allegations made in a “whistleblower” lawsuit that the nursing homes submitted false claims to Medicare and Medi-Cal for services provided to patients referred from Scripps Mercy Hospital.
Bills submitted for patients referred as a result of illegal kickbacks would constitute fraud against the United States and the State of California.
The four nursing homes involved in the settlement are: Point Loma Convalescent Hospital, Brighton Place – San Diego, Brighton Place – Spring Valley, and Amaya Springs Health Care Center in Spring Valley.
These same four nursing homes entered into Deferred Prosecution Agreements (DPAs) with the United States Attorney’s Office in San Diego in 2016.
In the DPAs, the four entities admitted that nursing home employees conspired to pay kickbacks without the knowledge of Brius Management Co.
The nursing homes admitted that their employees used corporate credit cards to pay for gift cards, massages, tickets to sporting events, and a cruise on the Inspiration Hornblower that were given to planners at Scripps Mercy Hospital as kickbacks.
“Kickbacks for patient referrals are illegal under federal law because of the corrupting influence on our nation’s healthcare system,” said Acting U.S. Attorney Sandra R. Brown. “This settlement demonstrates our resolve to combat fraud that compromises the care provided to patients served by a government healthcare plan. This case further shows the power of whistleblowers to shine a light on corrupt activities and obtain significant recoveries on behalf of United States taxpayers.”
The settlement calls for guaranteed payments of $1,785,967 to the United States, to be paid in three annual installments, and a $240,950 lump sum payment to California. The nursing homes paid the first installment to the United States on November 6, and California received its payment on November 10.
The hospitals also agreed to pay up to $4.9 million to the United States if certain operational contingencies are met, making the total settlement worth up to $6,926,917.
The four nursing homes have also entered into Corporate Integrity Agreements with the Department of Health and Human Services.
“Skilled nursing facilities that pay kickbacks in order to boost profits will be held accountable for their improper conduct,” said Christian J. Schrank, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General. “We will continue to crack down on kickback arrangements, which can corrupt medical decision-making and undermine the public’s trust in the health care system.”
Eric S. Birnbaum, Special Agent in Charge of the San Diego Division of the Federal Bureau of Investigation, stated, “The FBI will continue to bring our resources to bear in support of False Claims Act investigations to protect the integrity of the Medicare Trust Fund.”
The settlement resolves a lawsuit brought by a former employee of one of the nursing homes under thequi tam – or whistleblower – provisions of the federal and state False Claims Acts, which allow private citizens to file lawsuits on behalf of the United States and California and share in any recovery.
The whistleblower, Viki Bell-Manako, will receive 20 percent of each settlement payment.
Federal authorities this morning arrested a South Los Angeles man who allegedly made a series of online threats to kill law enforcement personnel and others at the Los Angeles Superior Court’s Inglewood Courthouse, according to officials.
He also threatened a school and private business.
John Patrice Hale, 42, who used the online moniker “Frost K Blizzard,” allegedly made the threats using techniques designed to make his internet communications anonymous, which included using Tor and proxy servers.
The indictment alleges that Hale sent the online threats over several days in May 2017 to the Los Angeles Sheriff’s Department’s Court Services Division website. Some of the threats invoked ISIS, but authorities have not uncovered any evidence linking Hale to international terrorism. The threats specifically alleged in the indictment are:
· “Our brotherhood will celebrate today when allah sets the explosives planted in Inglewood sheriff vehicles at Inglewood court,” which was sent on May 12. This threat prompted the evacuation of the Inglewood Courthouse, and the Sheriff Department’s Arson and Explosives Unit and the Threat Interdiction Unit responded.
· Two similar threats sent on May 15, one of which read, in part: “Allah willing we will be able to take out as many officers that pull out your parking structure. It will be a plus to take part of your American school across the street. ISIS will have revenge today.” Law enforcement again responded to the Inglewood Courthouse, which was not evacuated after a threat assessment.
· Two threats made on May 16, one of which read: “Item under deputy car. Impact for a half city block. 6 hours to locate it. At Inglewood sheriff station. If you have units out better call them back in.” These communications again prompted a significant response by law enforcement and evacuation of the Inglewood Courthouse.
In addition to these threats, Hale allegedly sent a threat to a private business through its website on May 23 that read: “All praises to Allah. Today, we will detonate an explosive at your La Brea and Arbor Vitae location if our needs aren’t met by your company. ISIS.”
The indictment further alleges that on May 25 Hale submitted bogus information to the FBI’s “Tips and Public Leads” webpage, despite a warning posted on that webpage that submitting a false tip could result in a fine and/or imprisonment.
In the submission, Hale allegedly made the false claim that he knew a man who “would supply ISIS with explosives even planting them for them” and who had received instructions from ISIS “to send inglewood sheriff department bomb threats via email.”
The indictment returned by a federal grand jury on Nov. 7 charges Hale with five counts of making false and misleading statements concerning terrorism, four counts of making threats to injure in interstate commerce and one count of making false statements to federal law enforcement.
A defendant is presumed innocent unless found guilty.
If Hale were to be convicted of the charges in the indictment, he faces up to five years in federal prison for each of the 10 counts.
The Department of Justice announced Tuesday that it got an additional $5.4 million for servicemembers whose vehicles were unlawfully repossessed by Well Fargo Bank.
The bank violated the Servicemembers Civil Relief Act and the evidence indicated that about 450 servicemen under a 2016 settlement agreed to settle the case, according to officials.
This additional amount brings the total compensation under the settlement to more than $10.1 million and the total number of servicemembers eligible for relief to more than 860.
On Sept. 29, 2016, the department filed a complaint in United States v. Wells Fargo Bank N.A., d/b/a Wells Fargo Dealer Services in California, alleging that Wells Fargo repossessed 413 vehicles of Civil Relief Act-protected servicemembers without court orders between Jan. 1, 2008 and July 1, 2015.
On the same day, the department agreed to a settlement that required Wells Fargo to pay $10,000 to each of the affected servicemembers, plus any lost equity in the vehicle with interest.
Wells Fargo was also required to pay a $60,000 civil penalty to the government and repair the credit of all affected servicemembers.
“Just a few days ago, we observed Veterans Day to honor those who have served our country so bravely,” said Acting Assistant Attorney General John M. Gore. “The Justice Department will continue to honor their service throughout the year by vigorously enforcing servicemembers’ rights under federal law. The men and women of our armed forces should be able to devote their full attention to their military duties, without having to worry about their cars being repossessed back home. We are pleased that our settlement agreement has ensured that hundreds of additional servicemembers will be compensated for the damages they suffered as a result of illegal auto repossessions.”
“The SCRA provides important protections and is intended to prevent unnecessary financial hardship for the brave women and men who serve in our armed forces,” said Acting U.S. Attorney Sandra R. Brown. “Losing an automobile through an unlawful repossession while serving our country is a problem servicemembers should not have to confront. We are pleased that Wells Fargo is taking action to compensate these additional servicemembers as required under the settlement with the Justice Department. My Office is committed to protecting the rights of servicemembers on all fronts.”
The SCRA requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service.
The court may delay the repossession or require the lender to refund prior payments before repossessing.
The court may also appoint an attorney to represent the servicemember, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the servicemember.
By failing to obtain court orders before repossessing motor vehicles owned by protected servicemembers, Wells Fargo prevented servicemembers from getting a court’s review of whether their repossessions should be delayed or adjusted to account for their military service, according to officials.
Arongkron “Paul” Malasukum, a resident of Woodside, New York, plead guilty Thursday to illegally trafficking in parts from endangered African lions and tigers, according to officials.
Malasukum, 41, pleaded guilty in Plano to a one count information charging him with wildlife trafficking in violation of the Lacey Act, officials said.
In papers filed in federal court in April 2016, Malasukum admitted to purchasing a tiger skull from undercover agents who were working for the U.S. Fish and Wildlife Service.
Malasukum also admitted to purchasing lion skulls from an auction house in Texas through the undercover agents on another occasion.
The agents were acting as “straw buyers” for Malasukum. Malasukum, who knew his out-of-state purchases could draw attention from federal law enforcement, gave the undercover agents cash and told them which items to bid on and ultimately win, according to authorities.
After the purchases, Malasukum shipped the tiger and lion skulls from Texas to his home in Woodside, New York. From New York, Malasukum shipped the skulls to Thailand for sale to a wholesale buyer.
As part of his plea, officials said Malasukum admitted that between April 9, 2015 and June 29, 2016, he exported approximately 68 packages containing skulls, claws, and parts from endangered and protected species, with a total fair market value in excess of $150,000.
All of the exports were sent to Thailand.
“This guilty plea is another positive result from the continued partnership between the U.S. Fish and Wildlife Service and the Justice Department,” said Acting Assistant Attorney General Jeffrey Wood. “Together we will continue to investigate and prosecute those who engage in illegal trade in protected wildlife.”
“Reasonable laws are in place to protect endangered animals, and to ensure that future generations have the opportunity to see and enjoy wildlife as we do today,” said Acting U.S. Attorney Brit Featherston. “There are fewer than four thousand tigers remaining in the wild and they must be protected from harm. Malasukum’s illegal actions breed further destructive behavior by others, such as the poaching of other endangered animals for greed. Lawful hunting and conservation go hand in hand; and law enforcement will protect those animals that are deemed endangered.”
The Department of Justice announced Thursday that on Nov. 9, the Madoff Victim Fund began its initial distribution of $772.5 million in funds forfeited to the U.S. Government in connection with the Bernard L. Madoff Investment Securities LLC. fraud scheme.
These funds will be sent to 24,631 victims across the globe.
This distribution represents the first in a series of payments that will eventually return over $4 billion to victims as compensation for losses they suffered from the collapse of the Madoff Investment Securities.
The Madoff Victim Fund has received over 65,000 petitions from victims in 136 countries.
These payments mark the single largest distribution of forfeited funds in the history of the Department’s victim compensation program.
“Thanks to civil asset forfeiture, the Department of Justice is announcing today the record-setting distribution of restitution to victims of Bernard Madoff’s notorious investment fraud scheme,” said Deputy Attorney General Rod J. Rosenstein. “We have recovered billions of dollars from third parties – not Mr. Madoff – and are now returning that money to tens of thousands of victims. This is the largest restoration of forfeited property in history.”
“Bernie Madoff committed one of history’s largest and most devastating frauds,” said Acting U.S. Attorney Joon H. Kim. “This Office not only prosecuted Madoff himself and others who helped perpetrate his fraud, but has remained committed to recovering money for his victims.”
Adding, “To date, this Office has recovered more than $9 billion for the innocent victims of Madoff’s fraud, and today’s distribution of $770 million, the single largest distribution of forfeited funds in the Department’s history is part of our ongoing commitment to not only prosecute criminals but also find relief for victims.”
“No amount of money in the world could ever reverse the catastrophic effects Madoff’s historic Ponzi scheme had on individuals and businesses alike,” New York’s FBI Assistant Director in Charge William Sweeney. “But now, nearly a decade after this crime was exposed, it is our hope that victims will finally be able to see the light at the end of a long, dark tunnel.”
For decades, Bernard L. Madoff used his position as Chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions from his clients, according to authorities.
On March 12, 2009, Madoff plead guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family and select members of his inner circle.
On June 29, 2009, U.S. District Judge Denny Chin sentenced Madoff to 150 years in prison for running the largest fraudulent scheme in history. Judge Chin ordered Madoff to forfeit $170.799 billion as part of Madoff’s sentence.
Of the approximately $4.05 billion that will be made available to victims, officials said about $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower.
An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action, according to officials.
The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family, and from civil and criminal forfeiture actions against Bernard L. Madoff, Peter B. Madoff and their co-conspirators, officials said.
Adelanto City Councilmember Jermaine Wright was arrested Tuesday on federal charges alleging he took a $10,000 cash bribe and hired a man to burn down his restaurant to collect the insurance money, officials said Wednesday.
The FBI arrested Wright, 41, for bribery and attempted arson of a building.
The criminal complaint outlines two schemes.
In the first, Wright allegedly solicited and accepted a $10,000 bribe from an undercover FBI agent who told Wright he wanted the councilmember’s assistance in navigating city rezoning and code enforcement issues related to a supposed marijuana transportation business.
In the second scheme, Wright allegedly paid $1,500 to another undercover FBI agent to burn down his restaurant.
The investigation into Wright, which began as a probe into possible corruption in the City of Adelanto, utilized an informant who introduced Wright to both of the undercover FBI agents and recorded a series of conversations in which Wright discussed both plots, according to the affidavit in support of the criminal complaint filed on Monday.
Soon after the investigation began, the informant – who is identified in the affidavit as a CHS or confidential human source – introduced Wright to a man who said he wanted to move his marijuana cultivation business to Adelanto.
The man who purportedly wanted to relocate his marijuana business was an undercover FBI agent who told Wright he was interested in using a property outside of the zone designated by the city for marijuana cultivation.
The undercover operative – who is called UC-1 in the affidavit – specifically wanted Wright’s assistance in expanding the area where marijuana cultivation was permitted.
During a meeting in June, Wright said that “to obtain the necessary votes from the Adelanto City Council for the expansion of the area zoned for marijuana cultivation, UC-1 would have to purchase Wright’s vote,” according to the affidavit.
After Wright said that his “price” was “20” – interpreted by the undercover agent to be $20,000 – Wright said a “donation” had to be made to a third party “because he keeps us out of jail.”
In mid-July, the Adelanto City Council approved the expansion of the marijuana zone with Wright voting in favor of the issue.
After the City Council action, the undercover agent sought Wright’s assistance in fast-tracking an approval for the purported marijuana business, which Wright agreed to do in exchange for “15.”
Wright did not receive the $20,000 for his vote because the City Council’s action occurred sooner than anticipated and the funds to pay the bribe were not available at the time, according to the affidavit.
Wright similarly was not paid for his services in speeding up the permit process for the marijuana cultivation operation because it required the purchase of a property prior to paying the bribe.
However, the informant later told the FBI that Wright was willing to take money in exchange for his help in securing an “exemption” that would allow the undercover operative to operate a marijuana transportation business.
After two meetings with the informant in which Wright discussed how the undercover agent could open a marijuana transportation business, Wright participated in a third meeting that also involved the undercover agent.
“During a meeting on October 6, UC-1 then placed $10,000 dollars on a box being used as a table, made up of two stacks of $50 bills, and told Wright, ‘that’s for you, or your non-profit, whatever,’” according to the affidavit. “Wright responded, ‘my non-profit, yes sir, thank you sir.’ Wright eventually placed the $10,000 in his pocket.”
After taking the bribe, Wright confirmed that he would assist with code enforcement and votes, according to the affidavit.
Wright also said he could curtail code enforcement activities against the marijuana transportation business, but it would require a “stack” – which Wright identified as $2,000 – each time Wright interceded.
In the second scheme, Wright sought the informant’s assistance in setting fire to Wright’s business, an Adelanto restaurant called Fat Boyz Grill.
The affidavit alleges that Wright subsequently solicited a second FBI undercover agent (UC-2) to assist Wright in burning down his restaurant so he could collect $300,000 in insurance proceeds.
Wright eventually paid the second undercover agent $1,500, gave the agent a tour of the restaurant, and assisted in the planning of the arson by providing a ladder for the undercover agent and discussing various tactics to maximize the damage.
The informant first reported the arson scheme to the FBI in early August, according to the affidavit.
In late August, the informant reported that Wright had again sought his assistance in finding someone to burn down Fat Boyz Grill.
In late September, Wright asked the informant to pass his cell phone number to the “electrician” – so named because Wright wanted the cause of the fire to appear to be an electrical problem.
Wright met the “electrician” – actually the second undercover FBI agent – on October 3 and said he wanted the fire on the following Saturday when the sprinkler system would be turned off, according to the affidavit.
After Wright assured the undercover agent that his insurance policy covers everything, the “electrician” agreed to do the job for $1,500.
At a meeting three days later, Wright paid the $1,500 after the undercover agent told Wright he needed more time to prepare for the job.
On October 17, FBI agents executed a federal search warrant at the restaurant and interviewed Wright.
According to the affidavit, Wright confessed to paying the undercover agent to burn down Fat Boyz Grill and that the would-be arsonist assured him that “this place be gone.”
The FBI told Wright that the “electrician” was providing agents with information about the scheme.
The affidavit states that, after Wright confessed to the attempted arson plot, Wright agreed to cooperate with the FBI’s investigation into corruption in the City of Adelanto, which included agreeing to surreptitiously use a recording device if requested by the FBI, tell the truth and maintain the confidentiality of the investigation.
The very next day, October 18, the informant reported to the FBI that Wright had called the informant, disclosed the FBI search warrant on the restaurant, and said that the so-called electrician was a “snitch.” Wright requested the CHS’s assistance in making UC-2 “go away,” according to the affidavit.
Wright later contacted the informant and asked the informant to attack Wright. According to the affidavit, one of the reasons Wright wanted to be assaulted was to obtain “the dismissal of criminal charges due to memory loss Wright would claim he suffered as a result of the assault.”
Wright instructed the informant to “put a rat next to me,” explaining that the FBI “would suspect someone has found out that I have talked to them [the FBI], and they’re sending me a message.”
According to the affidavit, Wright continued, “I am going to lose at least three months of memory or more.”
On the morning of November 3, the San Bernardino County Sheriff’s Department received a call for medical aid from an employee at Fat Boyz Grill.
When deputies responded, they observed Wright on the ground in the restaurant’s parking lot being treated by firefighters.
While he had no visible injuries, Wright was transported to a hospital, and he reported being attacked and robbed by an unknown assailant.
Wright was taken into custody by FBI agents after he was summoned for another interview.
Wright is presumed innocent unless proven guilty.
If Wright were to be convicted of the two charges in the complaint, he is facing up to 10 years in prison for the bribery count and up to 20 years for the arson charge.
The arson charge also carries a mandatory minimum prison sentence of five years in prison.