LABOR UNION OFFICIAL PLEADS GUILTY TO THEFT FROM LABOR ORGANIZATION

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, August 28, 2014

Former Secretary-Treasurer Pleads Guilty to Theft of Union Treasury Funds

The former Secretary-Treasurer of Security Police Fire Professionals of America Local 287 pleaded guilty today to theft from a labor organization in violation of his fiduciary responsibilities as a union officer.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and District Director Mark Wheeler of the Department of Labor, Office of Labor-Management Standards, Washington District Office made the announcement.

Milton Hilliard, 47, of Fort Washington, Maryland, was the Secretary-Treasurer of Local 287, which represents security guards employed by Coastal International Security at various locations in Washington, D.C.   At the plea hearing, he acknowledged that, between September 2008 and December 2010, he made dozens of unauthorized personal purchases using union funds.   Specifically, he used the Local 287 debit card to purchase $11,303.92 in personal items at places such as Bed Bath & Beyond, Best Buy, Maryland Speedy Tag & Title, DARCARS Toyota, H&R Block, Golden Corral, Five Below and others.   During the same period, Hilliard made 29 unauthorized cash withdrawals, totaling $23,308.50, from the Local 287 treasury.

Hillard pleaded guilty before U.S. District Judge Tanya S. Chutkan in the District of Columbia.   Sentencing is set for Nov. 18, 2014.

The investigation was conducted by the Department of Labor, Office of Labor-Management Standards, Washington District Office.   The case is being prosecuted by Trial Attorney Vincent J. Falvo Jr. of the Criminal Division’s Organized Crime and Gang Section.

FIVE CHARGED IN CONSPIRACY TO OBTAIN UNION JOB FOR ORGANIZED CRIME UNDERBOSS

FROM:  THE JUSTICE DEPARTMENT 
Thursday, March 27, 2014

Five Individuals Charged with Conspiring to Fraudulently Obtain Union Job for Organized Crime Underboss

Former New York Post Driver Also Charged with Having “No Show” Job

Five men have been charged in the Eastern District of New York with conspiring to defraud the Newspaper and Mail Deliverers’ Union (NMDU) and Hudson News newsstands to obtain a union card and employment at Hudson News newsstands for the son of the alleged underboss of the Colombo family of La Cosa Nostra.

A criminal complaint was unsealed today charging Benjamin Castellazzo Jr., Rocco Giangregorio, Glenn LaChance, Rocco Miraglia, aka “Irving,” and Anthony Turzio, aka “the Irish Guy,” with mail fraud conspiracy.   The five men were arrested earlier today, and their initial appearances are scheduled for this afternoon before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn.

In addition, a three-count indictment was unsealed today charging Thomas Leonessa, aka “Tommy Stacks,” with wire fraud, wire fraud conspiracy and theft and embezzlement from employee benefit plans in an unrelated scheme.   The indictment was returned by a federal grand jury sitting in Brooklyn, N.Y., on March 6, 2014, and relates to Leonessa’s alleged “no show” job as a delivery driver for the New York Post.

The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, United States Attorney Loretta E. Lynch of the Eastern District of New York Acting Special Agent in Charge Cheryl Garcia of the New York region of the U.S. Department of Labor’s Office of Labor Racketeering and Fraud Investigations and Assistant Director in Charge George C. Venizelos of the FBI’s New York Field Office.

As alleged in the complaint, the NMDU is an independent union that represents approximately 1,500 employees involved in the newspaper industry in New York, New Jersey and Connecticut.   NMDU members deliver newspapers for The New York Times, The Wall Street Journal, the New York Daily News, the New York Post and El Diario.   Hudson News, which also employs members of the NMDU, is a retail chain of newsstands mainly located in major transportation hubs, including airports and train stations.

Between June 2009 and October 2009, Miraglia, who was a foreman at the New York Daily News – as well as an associate of the Colombo organized crime family and the son of a deceased soldier in the Colombo family – conspired with officials of the NMDU and with Turzio, an employee of El Diario, to get an NMDU union card for Castellazzo Jr. and place him in a job at Hudson News.   Castellazzo Jr. is the son of Benjamin Castellazzo, the alleged underboss of the Colombo family.   Giangregorio and LaChance, who are business agents for the NMDU, also participated on this scheme.

As alleged in the indictment, Leonessa was employed by the New York Post to deliver newspapers by truck from a New York Post warehouse in the Bronx, N.Y., to New Jersey.   He was also a member of the NMDU, which maintained offices, including offices for its welfare and pension funds, in Queens, N.Y.   From about December 2010 to about September 2011, Leonessa had a “no show job” – a job for which he was paid wages and benefits for services he did not perform – at the New York Post.   When Leonessa did not complete his required deliveries, he was nevertheless, based on his fraudulent representations, paid wages by the New York Post and accorded benefits from employee pension and welfare funds managed by the NMDU.

Leonessa is scheduled to be arraigned this afternoon before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn, N.Y.

The charges in the complaint and indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The case was investigated by the U.S. Department of Labor’s Office of Labor Racketeering and Fraud Investigations and the FBI, with assistance from the New York City Police Department, the New York County District Attorney’s Office and Waterfront Commission of New York Harbor.

The government’s case is being prosecuted by Trial Attorney Joseph Wheatley of the Department of Justice’s Organized Crime and Gangs Section and Assistant U.S. Attorneys Elizabeth A. Geddes and Allon Lifshitz.

3 INDICTED IN CORRUPTION SCHEME INVOLVING MARINE CORPS LOGISTICS BASE

FROM:  JUSTICE DEPARTMENT 
Wednesday, January 22, 2014
Three Georgia Men Charged in Alleged Widespread Corruption Schemes at Local Military Base

Three Georgia men have been charged in a 51-count indictment for their alleged participation in fraud and corruption schemes at the Marine Corps Logistics Base (MCLB) in Albany, Ga., resulting in the loss of millions of dollars to the United States government.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia made the announcement after the indictment was unsealed in the Middle District of Georgia today.

Christopher Whitman, 48, co-owner of United Industrial of Georgia Inc. (also known as ULOC), an Albany-based trucking company and freight transportation broker , was indicted on 43 counts of money, property and honest services wire fraud, five counts of bribery and one count of theft of government property.  Shawn McCarty, 36, of Albany, a former employee at the MCLB-Albany, was charged with 30 counts of money, property and honest services wire fraud and one count of bribery; and Bradford Newell, 43, of Sylvester, Ga., also a former employee at the MCLB-Albany, was charged with 13 counts of money, property and honest services wire fraud, one count of bribery, and one count of theft of government property.

The three men were arrested earlier today and appeared before U.S. Magistrate Judge Thomas Q. Langstaff.   Judge Langstaff ordered the three men detained pending further hearings next week.

According to the indictment, Whitman paid nearly $1 million in bribes to Mitchell Potts, the former traffic office supervisor for the Defense Logistics Agency (DLA) at MCLB-Albany, Jeff Philpot, the former lead transportation assistant in the traffic office, and Shawn McCarty, another transportation assistant in the traffic office, to obtain commercial trucking business from the DLA.   The indictment alleges that Potts, Philpot and McCarty used their official positions to defraud the government and benefit ULOC by helping ULOC obtain transportation contracts loaded with unnecessary premium-priced requirements – including expedited service; removable gooseneck trailers, which do not require a loading dock and are therefore more expensive than standard trailers; and exclusive use, which requires that freight be shipped separately from other equipment – even if that results in a truck not being filled to capacity.   The indictment alleges that Whitman and ULOC brokered these shipments for service without the premium specifications and on fewer trucks than requisitioned by DLA, but they billed the government at rates approved by the corrupt officials.   These actions are alleged to have resulted in ULOC profits grossing more than $20 million over less than four years.

Whitman is accused of orchestrating a scheme to steal and sell surplus equipment from MCLB-Albany worth more than $1 million.   Whitman allegedly paid approximately $200,000 in total bribes to Shelby Janes, the former inventory control manager of the Distribution Management Center (DMC) at MCLB-Albany, and Newell, an assistant to Janes, who used their official positions to help Whitman steal surplus equipment from the base, including bulldozers, cranes and front-end loaders.   The indictment alleges that Whitman improved and painted the stolen equipment.

An indictment is merely a charge and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

If convicted, the defendants face up to 20 years in prison for each wire fraud count and 15 years in prison for each bribery count.   The theft count carries a maximum prison term of 10 years.   Each charged count carries a maximum fine of $250,000 or twice the gross gain.

Prior to this indictment, one former ULOC employee and three DLA officials pleaded guilty in connection with the fraud and corruption schemes alleged in the indictment.   On Oct. 10, 2013, Kelli Durham, ULOC’s former manager, pleaded guilty to conspiracy to commit wire fraud, admitting to intentionally overbilling the United States for services ULOC did not perform, resulting in losses ranging from $7 million to $20 million, and for receiving $905,685 for her role.   She faces a maximum penalty of five years in prison.   In May 2013, Potts and Philpot pleaded guilty to bribery for collectively accepting more than $700,000 in bribes; and in February 2013, Janes pleaded guilty to bribery for receiving nearly $100,000 in bribes.   The three former officials each face up to 15 years in prison.

The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit, Defense Criminal Investigative Service, DLA Office of the Inspector General, and the Department of Labor Office of the Inspector General.   The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.

SOLDIER, CIVILIAN SENTENCED FOR ROLES IN FUEL THEFTS IN AFGHANISTAN

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, October 29, 2013
Army Soldier and Civilian Sentenced on Bribery Charges for Facilitating Thefts of Fuel in Afghanistan

A former U.S. Army Sergeant and a co-conspirator have been sentenced in the District of Colorado for their roles in stealing fuel at Forward Operating Base (FOB) Fenty, Afghanistan, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announced.

U.S. Army Sergeant Christopher Weaver, 30, of Fort Carson, Colo., was sentenced on Oct. 28, 2013, to serve 37 months in prison.  Weaver pleaded guilty Oct. 20, 2012, and was sentenced by U.S. District Court Judge Marcia S. Krieger.                    

Jonathan Hightower, 31, of Houston, Texas, who worked at FOB Fenty as a civilian employee of a contractor and who had conspired with Weaver, was also sentenced on Oct. 28, 2013, to serve 27 months in prison. He pleaded guilty Aug. 3, 2012, and was sentenced by U.S. District Court Judge William J. Martinez.

A third conspirator, former soldier Stephanie Charboneau, pleaded guilty on Sept. 5, 2013, before U.S. District Court Judge Philip A. Brimmer.  Her sentencing is set for Dec. 9, 2013.

Weaver and Hightower were also ordered to pay $1,225,000 in restitution, jointly with Charboneau.  Hightower was also ordered to pay $400,000 in restitution for a related fuel theft scheme that was the subject of the prosecution.

According to court documents, from in or about January 2010 through June 2010, Weaver, Hightower and Charboneau were involved in handling the uploading and transportation of fuel from FOB Fenty, near Jalalabad, Afghanistan, to nearby military bases.  Weaver and Charboneau created false and fraudulent documents purporting to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation was required.  Hightower was a civilian who worked at the base’s “fuel point” uploading fuel trucks, occasionally filling the trucks with fuel to be stolen and taking other steps to assist the conspiracy.  At the direction of Weaver and Charboneau, fuel truck drivers used the fraudulent documents to justify the filled trucks’ departures from FOB Fenty.  In truth, after the filled fuel truck left the base, the fuel was simply stolen, and Weaver and Charboneau would receive cash from the representative of the trucking company that supplied the fuel trucks.  The cash would be split among the three conspirators.    

All three conspirators pleaded guilty to receiving payments from a representative of the trucking company in exchange for facilitating the theft of approximately 70 5,000-gallon truckloads of fuel.  Each of the three acknowledged that the loss to the United States was in excess of $1 million.

The cases were investigated by the Special Inspector General for Afghanistan Reconstruction, the Department of the Army, Criminal Investigations Division (CID); the Defense Criminal Investigative Service; and the FBI.

These cases were handled by Special Trial Attorney Mark H. Dubester of the Criminal Division’s Fraud Section, who is on detail from the Special Inspector General for Afghanistan Reconstruction (SIGAR).

SEC CHARGES FORMER CEO OF EDUCATION SERVICES PROVIDER WITH STEALING TENS OF MILLIONS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today charged the former CEO of an education services provider based in China with stealing tens of millions of dollars from investors in a U.S. public offering, and charged another executive with illegally dumping his stock in the company after he helped steal valuable company assets.

The SEC alleges that ChinaCast Education Corporation’s former CEO and chairman of the board Chan Tze Ngon illicitly transferred $41 million out of the $43.8 million raised from investors to a purported subsidiary in which he secretly held a controlling 50 percent ownership stake.  From there, Chan transferred investor funds to another entity outside ChinaCast’s control.  Chan also secretly pledged $30.4 million of ChinaCast’s cash deposits to secure the debts of entities unrelated to ChinaCast.  None of the transactions were disclosed in the periodic and other reports signed by Chan and filed with the SEC.

The SEC further alleges that Jiang Xiangyuan, ChinaCast’s former president for operations in China, avoided more than $200,000 in losses by illegally selling approximately 50,000 ChinaCast shares after participating in the ownership transfer of one of company’s revenue-generating colleges before it was publicly disclosed by a new management team.  ChinaCast had a market capitalization of more than $200 million before these alleged frauds came to light.  After Chan and Jiang were terminated and their misconduct was publicly disclosed by new management, ChinaCast’s market capitalization dropped to less than $5 million.

“The massive fraud perpetrated by Chan destroyed hundreds of millions of dollars in market value, and Jiang’s brazen insider trading allowed him to profit by dumping his own shares on the market before the fraud was exposed,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.

According to the SEC’s complaint filed in federal court in Manhattan, ChinaCast entered the U.S. capital markets through a reverse merger in December 2006, and its common stock was listed on the NASDAQ from Oct. 29, 2007 to June 25, 2012.  ChinaCast conducted multiple public stock offerings in the U.S., with the second one occurring in December 2009 when ChinaCast represented that the proceeds would be used for “working capital, future acquisitions, and general corporate purposes.”  Chan instead directed and engaged in the transactions that moved investor funds outside ChinaCast’s corporate structure for his personal benefit.  He did so without seeking or obtaining the approval of ChinaCast’s board of directors, and the transactions were not publicly disclosed until ChinaCast’s new management prompted the company to file a Form 8-K on Dec. 21, 2012, disclosing Chan’s misconduct.

The SEC alleges that ChinaCast falsely stated in multiple SEC filings signed by Chan that the company indirectly owned 98.5 percent of ChinaCast Technology (HK) Limited – the purported subsidiary to which Chan first transferred investor funds.  However, ChinaCast actually held only an indirect 49.2 percent interest while Chan personally owned 50 percent.  Chan also signed a number of periodic reports falsely stating that offering proceeds were under ChinaCast’s control and falsely including those funds in amounts that ChinaCast reported as cash and cash equivalents.  Chan also defrauded shareholders and prospective investors by secretly pledging ChinaCast’s existing term cash deposits as collateral to secure debts incurred by various third parties that had nothing to do with ChinaCast’s business.  Chan signed periodic reports falsely stating that ChinaCast’s cash and cash equivalents were completely unencumbered.

“Chan orchestrated the systematic looting of ChinaCast and hid his misconduct by repeatedly lying to investors about the company’s assets until he lost control of the board and was terminated,” said Sanjay Wadhwa, Senior Associate Director for Enforcement in the SEC’s New York office.  “Officers and directors who misuse their access to the U.S. capital markets will be held accountable for their insidious behavior.”

According to the SEC’s complaint, Jiang was a member of the senior management group headed by Chan.  Jiang engaged in illegal trading based on inside information by selling his shares on March 28, 2012, at $4.59 per share.  After Chan’s management group lost control of the board, they transferred ownership of ChinaCast’s three profitable brick-and-mortar colleges away from ChinaCast to Jiang and the dean of one of the colleges.  They were later sold to others.  At least one of the colleges was transferred to Jiang and the dean three weeks before Jiang’s March 28 stock sale.  Jiang was terminated on March 29, and NASDAQ suspended trading in ChinaCast on April 2 due to its failure to file an annual report for 2011.  ChinaCast was later delisted.  When over-the-counter trading resumed on June 25 after multiple disclosures made by new management about former management’s misconduct, the stock opened at 55 cents per share and closed at 82 cents.  ChinaCast’s stock is currently trading at 10 cents per share.

Chan is charged with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as well as violations of various corporate reporting, recordkeeping, and internal controls provisions.  Jiang is charged with illegal insider trading in violations of the same antifraud provisions.  The SEC seeks disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, permanent injunctions, and officer-and-director bars.

The SEC’s investigation, which is continuing, has been conducted by Dominick Barbieri and George Stepaniuk in the SEC’s New York office.  The SEC’s litigation will be led by Nancy Brown.  Assisting in the investigation was the SEC’s Cross Border Working Group, which has representatives from each of the agency’s major divisions and offices and focuses on U.S. companies with substantial foreign operations.

JUSTICE DEPARTMENT ALLEGES GANG STOLE $4.6 MILLION IN JEWELRY

The following excerpt is from the Department of Justice website:
Wednesday, March 21, 2012
Alleged Members of Jewelry Theft Ring Arrested
Atf-Led Investigation Ties Richmond, Va.-Based Ring to Alleged $4.6 Million in Thefts
WASHINGTON – Seven alleged members of a jewelry theft ring were arrested yesterday on charges related to their alleged roles in a highly sophisticated and violent organization that has stolen more than $4.6 million worth of jewelry from traveling jewelry sales representatives throughout Virginia and at least six other states.   Charges against the individuals were unsealed today after the defendants made initial court appearances in Newport News, Va.

The arrests and charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; and Daniel Kumor, Acting Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Washington Field Division.

“According to the charges unsealed today, members of this organized criminal group stole more than $4.6 million in jewelry from victims in Virginia and at least six other states,” said Assistant Attorney General Breuer.   “The defendants allegedly operated their sophisticated scheme for more than two years, using intimidation and violence to carry it out.   Organized criminal groups pose a serious threat to the safety and security of our communities, and we will continue to do everything in our power to bring them to justice.”

“This tight-knit group is accused of violently attacking traveling salesmen to rob them of more than $4.6 million in jewelry,” said U.S. Attorney MacBride.   “This group did their homework.  We allege they were dangerous, patient, extremely mobile and struck swiftly.   We are grateful that the ATF and our law enforcement partners were just as patient, mobile and able to strike swiftly once we had identified those believed to be involved.”

“These arrests highlight the outstanding work that dedicated ATF agents and our law enforcement partners do to keep our streets safe,” said Acting Special Agent in Charge Kumor. “This investigation required a lot of long hours and excellent coordination among investigators, prosecutors and agencies throughout the region, and epitomizes the fine work law enforcement does every day.”

According to court records, Alexander Cuadros-Garcia, aka “Alex,” “Brujo,” “Aleto” and “Manuel Gonzalez”, 37, of Richmond, Va., is accused of leading a team of individuals who specialized in conducting surveillance on jewelry stores to identify and then rob jewelry sales representatives and couriers.   The ring is believed to have committed and attempted robberies since March 2010 in Prince William County, Henrico County, Virginia Beach, Williamsburg, McLean, Charlottesville, Harrisonburg and Roanoke in Virginia, as well as locations in New York, New Jersey, North Carolina, Maryland, Tennessee and California.

Court documents allege the ring has ties to South American theft groups, which are transnational criminal groups typically of Colombian nationality that work in teams to steal jewelry, gems and precious metals from individuals carrying hundreds of thousands of dollars in merchandise at one time.

The alleged members of the Richmond-based ring regularly conducted lengthy surveillance on jewelry stores to identify vulnerable individuals and then follow their targets back to the individuals’ hotel or home.   In most of the alleged robberies, several men would suddenly appear as the victims approached or entered their car, punch out the car’s windows, threaten the victims at knife-point and steal the victims’ merchandise.   In addition, the thieves would puncture the victims’ car tires and steal their cell phone to reduce the chance of pursuit or apprehension.

After a successful robbery, members of the ring allegedly traveled to New York to sell the merchandise to businessmen, who acted as “fences” and coordinated re-selling the stolen property or melting it down for future use.

In addition to Cuadros-Garcia, those arrested yesterday include the following:
Leonardo Ortiz, 41, aka “Luis Angel Arana-Garcia,” of North Chesterfield, Va., who allegedly participated in most of the robberies, conducted surveillance, structured cash and made numerous trips to New York to meet with the “fences.”
Lucesita Argueta, 32, aka “Lucy,” of Richmond, who allegedly participated in several robberies, conducted surveillance and coordinating with the “fences.”
Francisco Javier Montesrein-Rodriguez, 32, aka “Lois K,” “Lex” and “Luis Rodriguez,” of Henrico, Va., who allegedly participated in several robberies and heavily assisted with the surveillance activities of the theft ring.
Raul Antonio Escobar-Martinez, 37, aka “Tony,” of Richmond, who allegedly assisted with surveillance of theft victims and potential victims.
Jose Alfredo Rivero-Garcia, 51, aka “Alfredo” and “Jose Ribero,” of Richmond, who allegedly participated in the surveillance of prospective robbery victims.
Juanita Diaz, 42, of Henrico, Va., the ex-wife of Cuadros-Garcia, who allegedly assisted in structuring proceeds from the sale of the stolen property, registered cars used by conspirators and provided other assistance to the theft ring.
Cuadros Garcia, Ortiz, Argueta, Montesrein-Rodriguez and Rivero were arrested yesterday in the Fredericksburg, Va.,- area, while Diaz was arrested in Richmond and Escobar-Martinez was arrested in Texas.

Diaz was charged in the criminal complaint with conspiracy to commit money laundering, which carries a maximum penalty of 20 years in prison.   The remaining defendants were charged with conspiracy to obstruct, delay and affect commerce by robbery and face a maximum penalty of 20 years in prison, if convicted.      

The investigation of this case was led by the ATF’s Washington Field Division, with the assistance of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the police departments in Williamsburg, Virginia Beach, Henrico County, Chesterfield, Prince William County and Fairfax County in Virginia, along with the Virginia State Police; the Baltimore County, Md., Police Department; the Port Authority of New York and New Jersey; the New York City Police Department; and the police departments in Rutherford, N.J., and Gwinnett County, Ga.; and the Morris County, N.J. Prosecutor’s Office.

Assistant U.S. Attorney Eric M. Hurt, Managing Assistant U.S. Attorney Howard Zlotnick and Trial Attorney Jerome Maiatico of the Organized Crime and Gang Section in the Justice Department’s Criminal Division are prosecuting the case on behalf of the United States.

Criminal complaints are only charges and not evidence of guilt.   Defendants are presumed to be innocent until and unless proven guilty.