Mobile Telesystems Pjsc and Its Uzbek Subsidiary Enter into Resolutions of $850 Million with the Department of Justice for Paying Bribes in Uzbekistan

Moscow-based Mobile TeleSystems PJSC (MTS), the largest mobile telecommunications company in Russia and an issuer of publicly traded securities in the United States, and its wholly owned Uzbek subsidiary, KOLORIT DIZAYN INK LLC (KOLORIT), have entered into resolutions with the Department of Justice and Securities and Exchange Commission (SEC) and agreed to pay a combined total penalty of $850 million to resolve charges arising out of a scheme to pay bribes in Uzbekistan.  In addition, charges were unsealed today against a former Uzbek official who is the daughter of the former president of Uzbekistan and against the former CEO of Uzdunrobita LLC, another MTS subsidiary, for their participation in a bribery and money laundering scheme involving more than $865 million in bribes from MTS, VimpelCom Limited (now VEON) and Telia Company AB (Telia) to the former Uzbek official in order to secure her assistance in entering and maintaining their business operations in Uzbekistan’s telecommunications market.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Geoffrey S. Berman of the Southern District of New York, Special Agent in Charge Raymond Villanueva of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Washington, D.C. and Chief Don Fort of IRS Criminal Investigation (IRS-CI) made the announcement.

Gulnara Karimova, 46, a citizen of Uzbekistan, was charged in an indictment filed in the Southern District of New York on March 7 with one count of conspiracy to commit money laundering.  Karimova is a former Uzbek official who allegedly had influence over the Uzbek governmental body that regulated the telecom industry.  Bekhzod Akhmedov, 44, a citizen of Uzbekistan and the former Uzbek executive, was charged in the same indictment with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), two counts of violating the FCPA, and one count of conspiracy to commit money laundering.  Karimova’s and Akhmedov’s case is assigned to U.S. District Judge Kimba Wood of the Southern District of New York.  

“Gulnara Karimova stands accused of exploiting her official position to solicit and accept more than $865 million in bribes from three publicly traded telecom companies, and then laundering those bribes through the U.S. financial system,” said Assistant Attorney General Benczkowski.  “The indictment and corporate resolution announced today, together with two prior corporate resolutions involving bribes allegedly paid to Karimova, demonstrate the Department’s comprehensive approach to foreign corruption: we will aggressively pursue both corrupt foreign officials and the companies and individuals who bribe them in order to gain unfair business advantages, and we will do everything we can to keep the proceeds of that corruption out of the U.S. financial system.”

“This is the third installment in a trilogy of cases arising from an almost $1 billion bribery scheme that reached the highest echelons of the Uzbekistan government and was orchestrated by some of the largest telecommunications companies in the world,” said U.S. Attorney Berman.  “By funneling multimillion-dollar bribe payments through the U.S. financial system, the companies and individual defendants corruptly tried to tip the global economy in their favor and line their own pockets.  But they are now paying the price.  Today, my Office and our law enforcement partners are sending a bold, unequivocal message that the U.S. financial system is not in business to enable foreign bribery or money laundering.  This Office stands ready to prevent, prosecute, and penalize foreign corrupt practices wherever in the world we find them.”

“Corruption of this level and reach poisons our integrity as a participant in the global marketplace,” said HSI Washington Special Agent in Charge Villanueva.  “Thanks to our skillful and collaborative investigators at HSI and the IRS-CI, Karimova and Ahkmedov’s exploitive crimes will be presented before just eye of our courts and no longer will such corruption be permitted to metastasize across our borders.” 

“With the increase in globalization and ease with which funds can be moved, criminals think their financial transactions cannot be tracked—but they would be wrong,” said IRS-CI Chief Fort.  “We will continue to investigate violations of the Foreign Corrupt Practices Act to ensure our country’s financial institutions are not used for devious purposes.  We are committed to aggressively pursuing all who engage in corruption, money laundering, and bribery for their own personal gain and at the expense of the U.S. government.”

According to the indictment against Karimova and Akhmedov, in or around the early 2000s, they agreed that Akhmedov would solicit and facilitate corrupt bribe payments from telecommunications companies seeking to enter the Uzbek market.  In exchange, Karimova allegedly used her influence over Uzbek authorities to help the telecommunications companies obtain and retain lucrative business opportunities in the Uzbek telecommunications market.  In total, Akhmedov conspired with the telecom companies and others to pay Karimova more than $865 million in bribes, and Akhmedov and Karimova conspired with others to launder and conceal those funds to, from and through bank accounts in the United States, in order to promote the ongoing bribery scheme, the indictment alleges. 

The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

MTS entered into a deferred prosecution agreement with the Department of Justice in connection with a criminal information filed yesterday in the Southern District of New York charging the company with one count of conspiracy to violate the anti-bribery and books and records provisions of the FCPA and one count of violating the internal controls provisions of the FCPA.  KOLORIT pleaded guilty to a one-count criminal information filed in the Southern District of New York, charging the company with conspiracy to violate the anti-bribery and books and records provisions of the FCPA.  Pursuant to its agreement with the department, MTS agreed to pay a total criminal penalty of $850 million to the United States, including a $500,000 criminal fine and $40 million in criminal forfeiture that MTS agreed to pay on behalf of KOLORIT.  MTS also agreed to the imposition of an independent compliance monitor for a term of three years and to implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals such as Akhmedov and Karimova.  The case against MTS and KOLORIT is assigned to U.S. District Judge J. Paul Oetken of the Southern District of New York.  

In related proceedings, MTS reached a settlement with the SEC.  Under the terms of its agreement with the SEC, MTS agreed to pay a $100 million civil penalty.  Consistent with Coordination of Corporate Resolution Penalties in Parallel and/or Joint Investigations and Proceedings Arising from the Same Misconduct (Justice Manual 1-12.100), the Department of Justice agreed to credit the civil penalty paid to the SEC as part of its agreement with MTS.  Thus, the combined total amount of criminal and regulatory penalties paid by MTS and KOLORIT to U.S. authorities will be $850 million.

According to the companies’ admissions, MTS and KOLORIT, through various managers and employees within MTS, MTS’s Uzbek subsidiaries Uzdunrobita LLC and KOLORIT, and other affiliated entities, paid approximately $420 million in bribes to Karimova, who had influence over the Uzbek governmental body that regulated the telecom industry.  The bribes were paid on multiple occasions between 2004 and 2012 so that MTS could enter the Uzbek market through the acquisition of Uzdunrobita and so that Uzdunrobita could gain valuable telecom assets and continue operating in Uzbekistan.  The companies admittedly structured and concealed the bribes through payments to shell companies that members of MTS’s and Uzdunrobita’s management knew were beneficially owned by Karimova.  MTS and Uzdunrobita also acquired KOLORIT, knowing that the price MTS and Uzdunrobita paid was inflated, in order to bribe Karimova in exchange for Uzdunrobita’s continuing to operate in Uzbekistan.  Uzdunrobita made payments to purported charities and for sponsorships to entities related to Karimova.  The Uzbek government expropriated Uzdunrobita in 2012 as a result of MTS’s, Uzdunrobita’s and KOLORIT’s failure to meet Karimova’s demands for additional payments.

A number of factors contributed to the Department’s criminal resolution with the companies, including (1) the companies did not voluntarily disclose; (2) the companies’ level of cooperation and remediation was lacking, not proactive; (3) the nature and seriousness of the office, including $420 million in bribes to a high-level Uzbek official; and (4) the mitigating factors present in this case, including that the Uzbek government expropriated the companies’  telecommunications assets in Uzbekistan, resulting in no realized pecuniary gain to the companies as a result of the misconduct.

The resolution, reached in coordination with the SEC’s resolution, marks the third such resolution by a major international telecommunications provider for bribery in Uzbekistan.  On Feb. 18, 2016, Amsterdam-based VimpelCom and its Uzbek subsidiary, Unitel LLC, entered into resolutions with the Department of Justice and admitted to a conspiracy to make more than $114 million in bribery payments to Karimova between 2006 and 2012.  On Sept. 21, 2017, Stockholm-based Telia and its Uzbek subsidiary, Coscom LLC, also entered into resolutions with the Department and admitted to a conspiracy to make more than $331 million in bribery payments to Karimova.  The investigation has thus far yielded a combined total of over $2.6 billion in global fines and disgorgement, including over $1.3 billion in criminal penalties to the United States.  In related actions, the Department has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg and Ireland, which constitute bribe payments made by MTS, VimpelCom and Telia, or funds involved in the laundering of those corrupt payments to Karimova.

The IRS-CI and HSI are investigating the cases as part of the IRS Global Illicit Financial Team in Washington, D.C.  Assistant Chief Ephraim Wernick and Senior Litigation Counsel Nicola J. Mrazek of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Edward Imperatore and Daniel Noble of the Southern District of New York are prosecuting the case against MTS and KOLORIT.  Assistant Chief Wernick and Trial Attorney Elina Rubin-Smith of the Fraud Section and Assistant U.S. Attorneys Imperatore and Noble are prosecuting the case against Karimova and Akhmedov.  Trial Attorney Michael Khoo of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) is prosecuting the forfeiture case with substantial assistance from former MLARS Trial Attorney Marie M. Dalton, now an Assistant U.S. Attorney in the Western District of Washington.

Law enforcement authorities in Austria, Belgium, Cyprus, France, Ireland, Isle of Man, Latvia, Luxembourg, Norway, the Netherlands, Switzerland, Sweden and the United Kingdom have provided valuable assistance in this case.  The Criminal Division’s Office of International Affairs provided significant assistance as well.  The SEC referred the matter to the Department and also provided extensive cooperation and assistance.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov.

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Author: March 7, 2019

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Miami CPA Sentenced to Prison for Tax Evasion

A Miami, Florida, certified public accountant (CPA) was sentenced today to 39 months in prison for tax evasion, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida, and Chief Don Fort, Internal Revenue Service-Criminal Investigation (IRS-CI).

“Tax professionals, such as Darryl Sharpton, who use their expertise to commit tax fraud and enrich themselves rather than to assist honest taxpayers will be fully prosecuted by the Department of Justice and held accountable for their criminal conduct,” stated Principal Deputy Assistant Attorney General Zuckerman. “Employment tax fraud is a violation of the trust of employees and all honest taxpayers.” 

U.S. Attorney Fajardo Orshan stated, “Rather than uphold the ethical obligations and professional code of conduct of a dutiful tax professional, Darryl Sharpton defrauded the federal government to avoid paying his own taxes, as well as taxes withheld from his employees’ pay.  As millions of hard-working taxpayers prepare and file their tax returns this season, today’s prison sentence should serve as a reminder of the stiff penalties that will be imposed on those who undermine the integrity of the U.S. tax system.”    

“For years, Darryl Sharpton, a CPA with three decades of public accounting and consulting experience, cheated the government and egregiously evaded the payment of substantial amounts of income taxes,” stated Chief Don Fort, Internal Revenue Service-Criminal Investigation (IRS-CI). “Today’s sentencing is an important victory for American taxpayers who play by the rules and have no tolerance for those who fail to pay their fair share. IRS-CI will continue to investigate and recommend prosecution for individuals such as Mr. Sharpton who ignore the law and shun their tax responsibilities.”

In December 2018, Darryl Sharpton, a CPA living in Miami, Florida, pleaded guilty to willfully evading the payment of federal income taxes for tax years 2004 through 2008, and 2010. Sharpton was an owner of The Sharpton Group, formerly known as Sharpton, Brunson and Company. The Sharpton Group specialized in financial and management consulting, audit and attestation, and tax and wealth planning. Sharpton filed personal income tax returns for years 2004 through 2008 and 2010, but willfully evaded payment of the taxes he owed for those years. To facilitate his fraud, Sharpton caused The Sharpton Group to pay his personal expenses through its corporate bank accounts, and then falsely stated to an IRS Revenue Officer that he did not pay his personal expenses from the corporate bank accounts.

The indictment also alleged that, after the IRS issued levies and liens against Sharpton to collect his unpaid tax liabilities, Sharpton took affirmative steps to evade the IRS’s collection efforts, including removing himself from The Sharpton Group’s payroll after the IRS issued a levy against his wages in 2007. Sharpton also admitted to not filing personal income tax returns for the years 2009 and 2011 through 2016.

Sharpton also failed to pay over to the IRS payroll taxes for The Sharpton Group for the quarters ending Dec. 31, 2012 through Dec. 31, 2013 and Dec. 31, 2014 through Dec 31, 2017.

In addition to the term of imprisonment imposed, U.S. District Court Judge Cecilia M. Altonaga ordered Sharpton to serve three years of supervised release and to pay $1,380,602 in restitution to the Internal Revenue Service.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Fajardo Orshan commended special agents of IRS Criminal Investigation, who investigated the case and Assistant U.S. Attorney for the Southern District of Florida Christopher J. Clark and Trial Attorneys Mara Strier and Sean Beaty of the Tax Division, who prosecuted the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

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Author: March 7, 2019

Florida Landscaper Indicted for Tax Fraud

A Florida man had his initial appearance in court yesterday after being arrested on an indictment charging him with filing false tax returns with the Internal Revenue Service, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida.

According to the indictment, Joseph J. Ferry III, owned Ferry Enterprises Inc., a residential and commercial landscaping business serving customers in Martin and Saint Lucie County. Ferry Enterprises also provided landscaping services for Martin County and the City of Port Saint Lucie.

Ferry was charged with five counts of filing false corporate income tax returns and five counts of filing false individual income tax returns with the Internal Revenue Service (IRS) that fraudulently understated the total income earned by Ferry Enterprises – and Ferry himself – for tax years 2012 through 2016. The indictment alleges that business income was deposited into corporate bank accounts; however, Ferry allegedly used money from the business bank accounts to pay his personal expenses, including payments on his personal mortgage and loans, purchases of firearms, home renovations, and jewelry. Ferry also allegedly withdrew more than $2.9 million in cash from the corporation’s bank accounts.

If convicted, Ferry faces a maximum sentence of three years in prison for each count of filing a false tax return with the IRS. He also faces substantial monetary penalties and restitution.

An indictment merely alleges that a crime has been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Fajardo Orshan commended special agents of IRS Criminal Investigation, who investigated the case, and Trial Attorneys Allison J. Garnett and Sean Beaty of the Tax Division, who are prosecuting the case. 

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

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Author: March 7, 2019

Deputy Attorney General Rod J. Rosenstein Delivers Keynote Address on FCPA Enforcement Developments

Thank you, Alexandra, for that kind introduction. 

It is fitting that one of my final speeches in this job is about promoting compliance and preventing corruption. I started my legal career as a public corruption prosecutor. I planned to spend a few years representing the United States before entering the private sector. That was almost 30 years ago. 

People talk about the revolving door between government and the private sector. The door never revolved for me. It was one way in, and it will be one way out. There are many good reasons to work for the United States government. But the work that you do – fighting corruption and creating a fair opportunity for honest American citizens who work hard and play by the rules – that is why I came here in the first place.

Your work also resonates with me because I attended an undergraduate business school, where I studied management, marketing, accounting, and finance. I planned to put those skills to use in corporate America. Law enforcement took me in a different direction, but understanding business remains central to my work.

Financial expertise is important to prosecutors because you need to comprehend transactions in order to recognize when they are fraudulent. And familiarity with the practical needs of doing business sometimes allows you to spot an innocent explanation for conduct that otherwise may appear suspicious.

But financial incentives can and do lead corporate officers to engage in corruption. It can be difficult to resist those incentives when public officials expect personal benefits. If we fail to enforce the rules, corrupt businesses will enjoy and profit from a competitive advantage. Rules that are not enforced can be worse than no rules at all, because honest people follow them anyway, giving corrupt people a cost-free competitive advantage.

A desire to promote morality is reason enough in itself to prevent corruption, but there is also a pragmatic benefit.

The forecasting models that I learned in business school rely on hypothetical “efficient markets” that benefit customers because prices reflect all relevant information. But corrupt markets are never efficient. Corruption does not only cause the good guys to lose business opportunities. Corruption produces excess profits for wrongdoers, at the expense of consumers. It raises prices and reduces innovation.

When I served as United States Attorney for Maryland, we conducted a lengthy criminal investigation that documented a widespread pay-to-play culture in one of our largest counties. When that sort of culture becomes engrained, honest businesspeople take their investments elsewhere. It happens in cities. It happens in states. In some places, it happens in nations.

Criminal prosecutions are part of the solution. Criminal cases reveal illegal schemes to the public and may cost corrupt officials their jobs. But every system remains vulnerable to people who pursue their own personal interests. So the key to promoting a culture of integrity is to build structures that resist corruption, and not just to hope for honorable employees.

The United States Constitution provides a good example. It aspires to establish a government that promotes the interests of the governed, rather than the interests of their temporary leaders. All government officials take an oath pledging loyalty to the public interest. Reliance on personal integrity and cultural norms is part of the strategy to preserve liberty. But it is supported by structural protections. The enforcement mechanism is crucial, as James Madison recognized in Federalist 51, because “you must first enable the government to control the governed; and in the next place oblige it to control itself.”

The Department of Justice uses similar protections. We instill a culture of ethical conduct from the first day employees take the oath of office – an oath to well and faithfully execute the duties of their office. Our Department’s name contains a moral value, and we reinforce it. In the words of a classic country song, “You’ve got to stand for something, or you’ll fall for anything.” We teach our employees what it means to stand for Justice.

As a result, if you walk into any branch of the Department of Justice, you will find honorable, ethical, and admirable people.

But no organization with 115,000 employees is flawless. We maintain a culture of integrity, not merely a culture of trust. We do not assume that everyone will obey their oath. We rely on auxiliary precautions. We need mechanisms to correct mistakes and punish wrongdoers.

Our Professional Responsibility Advisory Office provides nationwide guidance about ethical responsibilities, and we designate experienced attorneys to serve as Professional Responsibility Officers in each U.S. Attorney’s Office.  Everyone in the Department participates in annual ethics training.

We also maintain professional, nonpartisan internal watchdogs. There are Offices of Professional Responsibility in Main Justice and in each of our law enforcement agencies, and an Office of the Inspector General with 475 employees and jurisdiction over the entire department. The Inspector General has criminal investigative authority as well as administrative authority. If an investigation requires criminal process, the Inspector General’s armed federal agents work with U.S. Attorneys to obtain grand jury subpoenas and search warrants, just like FBI agents. Our internal watchdogs help us to deter waste, fraud, and abuse.

Most importantly, Department of Justice employees develop the discipline imposed by the need to prove allegations to a judge and jury in an open courtroom, with credible witnesses and admissible evidence. That gives us a powerful incentive to seek the truth, and only the truth, wherever it may lead.

Ensuring the integrity of governmental processes is essential to building public confidence in the rule of law, and it is supported by the commitment of private sector leaders. 

I am grateful to TRACE International and its member companies for your work to uphold the rule of law.

President Donald Trump issued a proclamation last year that summarized what the rule of law is about. It said that “we govern ourselves in accordance with the rule of law rather [than] … the whims of an elite few or the dictates of collective will.”

Our nation’s founders did not take the rule of law for granted. First, they fought a war on their own soil to break free from rule by a foreign monarch. Then they operated for a decade under the Articles of Confederation, with a weak central government that proved incapable of meeting its obligations. So, in 1787, the Constitutional Convention met in Philadelphia to establish rules for a new central government. The founders agreed on a written Constitution establishing structural protections to promote the rule of law.

 But the concept of a government bound by law to serve the people is not universal.

I visited the nation of Armenia in 1994, when it was emerging from seven decades of Soviet domination. I gave a lecture about public corruption laws. When I finished, a student raised his hand. He asked, “If you can’t pay bribes in America, how do you get electricity?”

That question illustrated how the young man learned to think about his society.

Businesses that bribe officials by offering personal benefits in return for the favorable exercise of government power undermine legitimate businesses and cheat citizens. It sets off a race-to-the-bottom and leads to increased prices, substandard products and services, and reduced investment. 

Before the enactment of the Foreign Corrupt Practices Act in 1977, paying bribes was an ordinary aspect of doing business overseas. Corruption was rife in many parts of the world.  Some European countries allowed companies to deduct bribes on their corporate tax returns as business expenses.

Congress passed the FCPA law with bipartisan support, and the marketplace adapted to America’s effort to establish and enforce anti-bribery laws.

Two decades later, the Organization for Economic Co-operation and Development adopted an Anti-Bribery Convention, establishing legal standards to prohibit bribery of public officials in international business transactions. The United States was one of the first signatories.  Our leadership encouraged other major world powers to commit to doing business with integrity.

Last year, the Department of Justice increased its prosecutions of white collar crime and other priorities. Thanks to a series of initiatives and policy changes, we are making corporate criminal enforcement more effective and efficient.

We announced charges against more than 30 individual defendants last year in FCPA-related cases, and convictions of 19 individuals.

Last month, we indicted a salesman and the president of an American company for allegedly paying bribes in Venezuela. They are charged for paying kickbacks to officials of a government-owned energy company.

That investigation led to charges against more than 30 individuals. Our Department received assistance from the Department of Homeland Security as well as our law enforcement colleagues in Switzerland and the Cayman Islands. That sort of international cooperation is essential to prohibit corruption by multinational corporations.

While pursuit of criminal and civil remedies against corporations is important, we should always focus on the individuals responsible for misconduct. Cases against corporate entities allow us to recover fraudulent proceeds, reimburse victims, and deter future wrongdoing. But the deterrent impact on the individual people responsible for wrongdoing is sometimes attenuated in corporate prosecutions. The most effective deterrent to corporate criminal misconduct is identifying the people who commit crimes and sending them to prison. Absent extraordinary circumstances, a corporate resolution should not protect individuals from criminal liability.

Critics who describe our policy changes as going soft on corporate crime completely miss the point. The goal of criminal enforcement should not be to pursue a small number of cases and set a new record each year for the largest check extracted from shareholders. Enforcement should not be like a random lightning strike. When there is a low risk of detection and enforcement against the company, and a minimal risk of punishing individuals, that does not deter corporate officers from pursuing their own personal profit though criminal activity. We aim to incentivize companies to report crimes, disgorge illegal proceeds, take remedial actions, and identify accountable officials so we can prosecute them – and do it all promptly. That will result in less corporate crime in the future.

We should focus on the people who play significant roles in setting a company on a course of criminal conduct. We want to know who devised and authorized criminal schemes, and hold them accountable.

Our individual accountability policy is designed to drive change, and lead more companies to implement meaningful proactive compliance programs. Change can be difficult in large organizations. But the ability to adapt to change is an essential survival skill. 

Nassim Nicholas Taleb coined the term “anti-fragile” to describe the most successful business model. He points out that the opposite of fragile is not merely robust or resilient. Anti-fragile things do not just bounce back in response to stress, like rubber bands. Instead they grow stronger, like muscles. 

Complacency can be deadly when circumstances change, and circumstances always change. Taleb tells a story that illustrates the danger of forgetting that past performance is never a reliable indicator of future outcomes: “Consider a turkey that is fed every day.  Every … feeding [enhances] the bird’s [confidence] that it is the general rule of life [that humans always] ‘look… out for its best interests’ ….  On the … [day] before Thanksgiving, something unexpected will happen to the turkey.”  Taleb refers to that as a “Black Swan” event – an occurrence so low in probability that we ignore the risk, but so great in impact that it renders projections moot.

Corporations need to prepare for unexpected events, but government should provide certainty when possible.

In FCPA cases, we incentivize exemplary corporate conduct. If companies self-report violations, cooperate with investigations, and remediate harm, we reward them with a presumption that we will decline to pursue the company with criminal charges. Instead, we focus our limited resources on individuals, and on companies that fail to take compliance obligations seriously. 

When criminal liability is not at issue and corporations seek expeditious resolutions, our attorneys should negotiate reasonable civil settlements that remedy the harm and deter future violations. If a company meaningfully assists the government’s investigation and candidly provides details about culpable officials and other employees most responsible for the misconduct, our civil attorneys have discretion to offer credit.

In all cases, we should make the punishment proportional to the violation. Companies in highly regulated industries may face multiple enforcement actions for the same conduct, so we try to ensure that corporate resolutions resulting from parallel or joint investigations are reasonable and proportionate.

If government agencies fail to coordinate and instead “pile on” with multiple penalties for the same conduct, it deprives the company of the certainty and finality available through a settlement. If a company seeks in good faith to resolve problems and move forward, it is appropriate when negotiating a settlement to consider the impact on innocent employees, customers, and investors, along with the need for deterrence. Resolving cases expeditiously and conclusively is also important because it allows government agencies to uncover and address new schemes instead of devoting additional enforcement resources to established violations.

We want our attorneys to coordinate their investigations to avoid the unnecessary imposition of duplicative fines, penalties, and forfeitures.  We also try to coordinate with other federal, state, local, and foreign enforcement authorities that want to resolve potential claims arising from the same misconduct.

Before I conclude, I want to talk about the importance of compliance programs, because law enforcement agencies achieve deterrence only indirectly. We prosecute criminal wrongdoing after it occurs. But a company with a robust compliance program can prevent corruption and eliminate the need for enforcement.

Most American companies take seriously their obligation to avoid illegal business practices.  They want to do the right thing. They need our help to protect them from devious competitors that seek unfair advantages by breaking the law.

To reduce white collar crime, we need to encourage companies to report suspected wrongdoing to law enforcement, and to resolve any liability expeditiously.

Corporate America should regard law enforcement as an ally. In turn, the government should provide incentives for companies to engage in ethical behavior and to assist in federal investigations. Law enforcement efforts are most effective when we build bridges with law-abiding businesses.

The government should provide incentives for companies to engage in ethical corporate behavior. That means notifying law enforcement about wrongdoing, cooperating with government investigations, remedying past misconduct, and preventing future misconduct by implementing a robust compliance program. 

The safest communities are self-policing. They do not rely on continual government enforcement.

We should encourage and support the development of self-policing mechanisms for corporate crime. Law enforcement agencies should give the greatest consideration to companies that establish effective compliance programs in advance, because it frees our agents and prosecutors to focus on people who commit more serious financial crimes or pose other threats to America. The fact that some misconduct occurs shows that a program was not foolproof, but that does not necessarily mean that it was worthless. We can make objective assessments about whether programs were implemented in good faith.

In all cases, compliance mitigates risk, making companies more valuable and less likely to encounter unanticipated costs from protracted investigations and penalties. When a company establishes a culture of integrity, it creates value. Compliance is an investment. Ethical, law-abiding companies attract better investors, employees, and customers. People want to do business with companies that are honest and reliable.

An effective compliance program is not just about a written policy or a regular training program. Companies should focus on how their compliance programs work in practice.

In Shakespeare’s play Henry the Fourth, a prince brags about his ability to call up ghosts. He proudly claims: “I can summon spirits from the vasty deep.” His skeptical friend mockingly replies, “Why, so can I, or so can any [one]; But [the question is,] will they come when you … call for them?”

Similarly, just talking about compliance is meaningless. A culture of compliance needs to be integrated into corporate policies. Employees should be trained and encouraged to think about compliance issues when making business decisions, and there should be regular audits to identify problems.

Finally, in the spirit of promoting a culture of integrity, I want to leave you with the wisdom of this ancient proverb: if you desire to know a person’s character, consider his friends. You can help protect your business by using caution when selecting associates and by ensuring appropriate oversight. Always make sure that you can stand proudly with the company you keep. 

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Author: March 7, 2019

Justice Department Coordinates Largest-Ever Nationwide Elder Fraud Sweep

Attorney General William P. Barr and multiple law enforcement partners today announced the largest coordinated sweep of elder fraud cases in history, surpassing last year’s nationwide sweep. The cases during this sweep involved more than 260 defendants from around the globe who victimized more than two million Americans, most of them elderly. The Department took action in every federal district across the country, through the filing of criminal or civil cases or through consumer education efforts. In each case, offenders allegedly engaged in financial schemes that targeted or largely affected seniors. In total, the charged elder fraud schemes caused alleged losses of millions of more dollars than last year, putting the total alleged losses at this year’s sweep at over three fourths of one billion dollars.

Attorney General Barr was joined in the announcement by FBI Deputy Director David L. Bowdich; Executive Associate Director Derek Benner for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI); Federal Trade Commission (FTC) Chairman Joseph Simons; Louisiana Attorney General and President of the National Association of Attorneys General Jeff Landry; Director Randolph Alles of the Secret Service; Chief Postal Inspector Gary Barksdale; Barbara Stewart CEO of the Corporation for National and Community Service; and former FBI director and CIA director Judge Webster and Lynda Webster.

The charges are merely allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

“Crimes against the elderly target some of the most vulnerable people in our society,” Attorney General William P. Barr said. “But thanks to the hard work of our agents and prosecutors, as well as our state and local partners, the Department of Justice is protecting our seniors from fraud. The Trump administration has placed a renewed focus on prosecuting those who prey on the elderly, and the results of today’s sweep make that clear. Today we are announcing the largest single law enforcement action against elder fraud in American history. This year’s sweep involves 13 percent more criminal defendants, 28 percent more in losses, and twice the number of fraud victims as last year’s sweep. I want to thank the Department’s Consumer Protection Branch, which led this effort, together with the Department’s Criminal Division, the more than 50 U.S. Attorneys’ offices, and the state and local partners who helped to make these results possible. Together, we are bringing justice and peace of mind to America’s seniors.”

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. The Justice Department has likewise conducted hundreds of trainings and outreach sessions across the country since the passage of the Act. In February 2018, the Attorney General announced the largest elder fraud enforcement action in American history at the time, charging more than 200 defendants in a nationwide elder fraud sweep. In November 2018, Department of Justice and Department of Agriculture hosted the first Rural and Tribal Elder Justice Summit in Des Moines, Iowa. The Summit focused on supporting the efforts of elder justice professionals to combat elder abuse and financial exploitation in rural and tribal communities.

Technical-Support Takedown 2019

As part of the sweep, the Department of Justice and its law enforcement partners announced a tech-support fraud takedown, designed to combat an increasingly common form of elder fraud in which criminals trick victims into giving remote access to their computers under the guise of providing technical support. In 2018, technical-support schemes generated over 142,000 consumer complaints to the FTC’s Consumer Sentinel Network. Consumers 60 and over filed more loss reports on tech-support scams from 2015 to 2018 than on any other fraud category reported to the Consumer Sentinel Network.

The Department of Justice’s Consumer Protection Branch, the Criminal Division’s Computer Crimes and Intellectual Property Section, and 10 U.S. Attorney’s Offices brought cases against perpetrators of technical-support fraud. The FBI, U.S. Postal Inspection Service, and HSI partnered with the Justice Department in investigating these cases, and the FTC, several state Attorneys General and the U.K.’s City of London Police joined the effort by initiating their own cases. A fact-sheet with technical-support fraud case information can be found here.

“We’re committed to investigating financial fraud schemes against the elderly,” said FBI Director Christopher Wray. “We’ve dedicated additional resources to address a wide range of elder fraud threats, including technical-support fraud. Victims of these schemes often lose thousands of dollars or more apiece, which can cause significant harm to elderly victims and their caretakers. If anyone suspects that they – or a senior they know – may be a victim of fraud, we encourage them to report it to the FBI’s Internet Crime Complaint Center.”

Transnational Criminal Organizations Committing Elder Fraud

“The sweep announced today brings the Postal Inspection Service to a landmark point in its battle against transnational criminal organizations committing mass mailing elder fraud,” said Chief Postal Inspector Barksdale. “In a recently unsealed case, two Canadians pled guilty and, thanks to the Spanish National Police, another was arrested in Spain for an alleged mail fraud scheme involving $180 million in losses to over one million victims. The Inspection Service has been at the forefront of protecting customers from fraud schemes for many years and we will continue to investigate and stop those who exploit older Americans for their own illegal gains.”

A fact-sheet with cases on mass mailing fraud can be found here.

Many of the cases brought as part of the elder fraud sweep announced today – including many of the technical-support fraud cases – allegedly involved transnational criminal organizations. The Department of Justice’s Office of International Affairs worked with numerous countries to secure evidence and capture defendants. During the sweep period, defendants in elder fraud cases were extradited from Canada, The Cayman Islands, Costa Rica, Jamaica, and Poland. A fact-sheet with examples of a few elder fraud cases involving extradition in which the Office of International Affairs played a substantial role can be found here.

Money Mule Initiative

In addition, in a novel approach, the Department of Justice and its law enforcement partners took comprehensive action against the money mule network that facilitates foreign-based elder fraud. Generally, a money mule is someone who transfers money acquired illegally in person, through the mails, or electronically, on behalf of others. Across the country, money mules receive fraud proceeds directly from victims and forward proceeds to perpetrators and ringleaders of fraud schemes—individuals who often reside in other countries. As part of the sweep, the FBI and the Postal Inspection Service took action against over 600 alleged money mules nationwide by conducting interviews, issuing warning letters, and bringing civil and criminal cases. Secret Service agents aided these efforts by seizing and forfeiting elder fraud proceeds in transit from victims to perpetrators.

“Homeland Security Investigations is committed to the fight against elder fraud in conjunction with the Justice Department, and our other law enforcement partners,” said Executive Associate Director Derek Benner. “HSI Special Agents across the country have worked to address illegal fund transfers, fraudsters operating technical-support schemes, and elder fraud of all varieties. We will continue to use creative solutions to protect our nation’s seniors from fraud; financial security is critical to homeland security.”

“The Secret Service is committed to aggressively investigating and disrupting organized criminal groups who prey on our most vulnerable citizens,” said Secret Service Director Randolph “Tex” Alles. “The results of the elder fraud sweep announced today demonstrate what can be achieved though incredible partnerships between federal, state, and local law enforcement agencies.”  

Public Education

The Department of Justice and its law enforcement partners focused the sweep’s public education campaign on technical-support fraud, given the widespread harm such schemes are causing. The FTC and State Attorneys General had an important role in designing and disseminating messaging material intended to warn consumers and businesses.

Public education outreach is being conducted by various state and federal agencies, including Senior Corps, a national service program administered by the federal agency the Corporation for National and Community Service, to educate seniors and prevent further victimization. The Senior Corps program engages more than 245,000 older adults in intensive service each year, who in turn, serve more than 840,000 additional seniors, including 332,000 veterans. Information on Senior Corps’ efforts to reduce elder fraud can be found here.

Global Efforts

Exceptional assistance from foreign law enforcement partners amplified the effectiveness of the Department’s initiative. The sweep announced today benefited greatly from the work of the International Mass-Marketing Fraud Working Group (IMMFWG), a network of civil and criminal law enforcement agencies from Belgium, Canada, Europol, the Netherlands, Norway, Spain, the United Kingdom and the United States. The IMMFWG is co-chaired by the Department of Justice and the FTC, and law enforcement in the United Kingdom, and serves as a model for international cooperation against specific threats that endanger the financial well-being of each member country’s residents. Due to the IMMFWG’s network of law enforcement, simultaneous technical-support fraud consumer education campaigns are being released in Canada, the Netherlands, the United Kingdom, and the United States.

Elder Fraud Complaints

Elder fraud complaints may be filed with the FTC at www.ftccomplaintassistant.gov or at 877-FTC-HELP. The Department of Justice provides a variety of resources relating to elder fraud victimization through its Office of Victims of Crime, which can be reached at www.ovc.gov.

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Author: March 7, 2019

New York Tax Return Preparer Found Guilty of Tax Crimes in Stolen Identity Refund Fraud Scheme

A Springfield Gardens, New York, resident was convicted yesterday by a federal jury for conspiring to commit aggravated identity theft and for two counts of aiding and assisting in the preparation of false tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to the evidence presented at trial, Afolabi Ajelero, the owner of Mo-Betta Ventures Inc., a tax preparation business located in Springfield Gardens, New York, conspired with others to possess and use without lawful authority one or more means of identification of another person. He also filed false corporate income tax returns for the 2014 and 2015 tax years for his business.

Ajelero was acquitted of wire fraud and aggravated identity theft counts.

Ajelero faces a maximum sentence of five years for the conspiracy conviction and a maximum sentence of three years in prison for each count of aiding or assisting in the preparation of false returns. He also faces a period of supervised release, restitution, forfeiture and monetary penalties.

On Feb. 15, 2019, co-defendant Hakeem Bamgbala pleaded guilty to 18 counts of wire fraud, 22 counts of aggravated identity theft, one count of conspiring to commit aggravated identity theft, and one count of aiding and assisting the filing of a false tax return. On July 31, 2018, co-defendant Michael Campbell pleaded guilty to conspiracy to commit aggravated identity theft. A sentencing date has not been set for Bamgbala and Campbell.

Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorneys Mark McDonald and Eric Powers of the Tax Division, who are prosecuting the case.

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Author: March 5, 2019

Non-Profit Organization Operator Pleads Guilty for Her Role in Armenian for-Profit U.S. Visa Fraud Scheme

Stella Boyadjian, 48, of Rego Park, New York pleaded guilty today to conspiracy to unlawfully bring in aliens, visa fraud, and aggravated identity theft before U.S. Magistrate Judge Sanket J. Bulsara in the Eastern District of New York for her role in a multi-year visa fraud scheme that brought Armenian citizens into the United States for profit.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue of the Eastern District of New York and U.S. Department of State Diplomatic Security Service (DSS) Director Christian J. Schurman, made the announcement.

According to the indictment, Boyadjian, led a transnational network of co-conspirators who engaged in a widespread visa fraud scheme to bring Armenian citizens into the United States by fraudulently claiming to the U.S. Citizenship and Immigration Services (USCIS) that the Armenians were members of performance groups, and thus qualified for P-3 “Culturally Unique Artist” visas.

The P-3 nonimmigrant visa classification allows foreign nationals to temporarily travel to the United States to perform, teach or coach as artists or entertainers, under a program that is culturally unique.  A U.S. employer or sponsoring organization is required to submit a USCIS Form I-129 Petition for a Non-Immigrant Worker, along with supporting documentation, attesting that the performances in the United States are culturally unique.

In February 2018, Boyadjian, Hrachya Atoyan, 31, of Glendale, California; and Diana Grigoryan, aka “Dina Akopovna,” 42, of the Republic of Armenia were charged in a 15-count indictment with visa fraud and with conspiracy to: defraud the United States, commit visa fraud, and illegally bring aliens into the United States.  Boyadjian and Grigoryan were also charged with related money laundering charges, and Boyadjian was charged with aggravated identity theft.

As alleged in the indictment, Boyadjian ran a non-profit organization called Big Apple Music Awards Foundation (BAMA) based in Rego Park, New York.  Boyadjian used the Big Apple Music Awards Foundation as well as formal and informal music industry contacts in the United States and Armenia to perpetuate the scheme.  Boyadjian and others solicited Armenian citizens who wanted to come to the United States and charged them between $0 and $10,000 to be included on the Form I-129 Petitions.  Boyadjian and other associates in Armenia then acquired fraudulent performer certificates and organized staged photo sessions where the aliens wore traditional Armenian folk outfits to make it appear as though they were traditional Armenian performers.  After being trained how to defeat U.S. visa interviews, the individual aliens presented these certificates and photos to U.S. consular officers during their visa interviews.  Once the Armenians entered the United States, some would pay Boyadjian and her associates additional money to be included in another fraudulent petition asking for P-3 visa extensions. 

Sentencing has not yet been scheduled for Boyadjian.

This case was a joint investigation by the DSS’s Criminal Fraud Investigations and Overseas Criminal Investigations Divisions with assistance from the USCIS Fraud Detection and National Security, Center Fraud Detection Operations in Vermont.  Trial Attorney Sasha N. Rutizer of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney David Gopstein of the Eastern District of New York are prosecuting the case.

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Author: March 4, 2019

Philadelphia Business Man Sentenced to More Than 10 Years in Prison for Bribing the Former Sheriff of Philadelphia

A Wyncote, Pennsylvania man was sentenced to 121 months in prison for participating in a bribery conspiracy involving the former Sheriff of Philadelphia.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania, Special Agent in Charge Michael T. Harpster of the FBI’s Philadelphia Division and Special Agent in Charge Guy Ficco of the IRS Criminal Investigation (IRS-CI) Philadelphia Field Office made the announcement.

James Davis, 68, the owner of multiple advertising and title firms, was sentenced by U.S. District Judge Wendy Beetlestone of the Eastern District of Pennsylvania, who also ordered Davis to pay $ 872,395.83 in restitution and to forfeit $1,718,540.  On April 3, 2018, after a six-week jury trial, Davis was convicted of conspiracy, honest services fraud, and tax offenses.

“James Davis used his wealth to line the pockets of the former Sheriff of Philadelphia in a corrupt exchange for contracts and business,” said Assistant Attorney General Benczkowski.  “Today’s sentence should deter both public officials and would-be bribe payers from engaging in corruption of any kind.”

“The citizens of Philadelphia are entitled to the honest services of their public servants, and James Davis’s actions deprived them of that from the Philadelphia Sheriff’s Office,” said U.S. Attorney McSwain.  “Davis received millions of dollars of business from the Philadelphia Sheriff’s Office, having obtained nearly exclusive control over the operation of the Sheriff sales and receiving over $7 million in advertising fees for those sales.  The sentence imposed today sends a powerful message to public servants and vendors who choose to do business by their own set of rules.”

“There’s an old saying that you have to spend money to make money,” said FBI Special Agent in Charge Harpster.  “Certainly, this is not the way to do it.  James Davis brazenly bought off then-Sheriff Green in order to boost his businesses. This illicit quid pro quo deprived Philadelphians of the honest services they expect and deserve from those who hold elected office. The FBI is committed to fighting such corruption, which does real and lasting damage to the public trust.”

“James Davis willfully and intentionally violated his legal duty to file his tax returns and pay the correct amount of tax,” said IRS-CI Special Agent in Charge Ficco.  “The courts have overwhelmingly and consistently shown that people who engage in such criminal behavior will be held accountable; as evidenced by the sentence handed down today.”

 According to the evidence presented at trial, Davis, in exchange for receiving, maintaining and increasing business with the Sheriff’s office, gave former Sheriff John Green bribes and personal benefits totaling over $675,000, including purchasing and renovating a home and selling the home at a loss to Green, hiring Green’s wife as a sub-contractor, facilitating over $65,000 in hidden campaign contributions to Green’s 2007 re-election campaign, paying $148,000 in campaign advertising for Green’s 2007 re-election campaign, and paying Green over $300,000 in gifts and interest-free loans.  In exchange, the evidence presented at trial showed that Green helped Davis maintain and increase his business with the Sheriff’s Office, specifically, business involving sheriff’s sales of foreclosed property.  From approximately 2002 through 2010, Davis’ companies received over $35 million from the Philadelphia Sheriff’s office from the sheriff’s sales business. 

Additionally, the evidence presented at trial revealed that Davis also filed false 2007 business and personal tax returns, and failed to file personal tax returns for 2008, 2009, and 2010. 

The FBI and IRS-CI investigated this case.  Trial Attorney Jennifer A. Clarke of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Sarah L. Grieb and Christopher Diviny of the Eastern District of Pennsylvania are prosecuting the case.

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Author: March 1, 2019

New Jersey Man Sentenced to 16 Years in Prison for Attempting to Provide Material Support to ISIS

Gregory Lepsky, 22, of Point Pleasant, New Jersey, was sentenced today to 16 years in prison for planning to construct and use a pressure cooker bomb in New York on behalf of a designated foreign terrorist organization, the Islamic State of Iraq and al-Sham (ISIS).  Assistant Attorney General for National Security John C. Demers and U.S. Attorney Craig Carpenito for the District of New Jersey made the announcement.

Lepsky pleaded guilty March 13, 2018, before U.S. District Court Judge Michael Shipp to an information charging him with one count of attempting to provide material support to a designated foreign terrorist organization, specifically ISIS.  Judge Shipp imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court:

On Feb. 21, 2017, Lepsky was arrested by the Point Pleasant Police Department in connection with an incident that occurred that day in his family’s home.  Following the arrest, law enforcement officers searched the residence and found a new pressure cooker stored behind a roll of bubble wrap in Lepsky’s bedroom closet.

During searches of computers and other digital evidence linked to Lepsky, law enforcement officers found evidence of Lepsky’s plan to build and detonate a bomb as part of his support for ISIS.  During several social media communications, Lepsky told others that he intended to fight on behalf of ISIS and that he would, if necessary, become a martyr by driving a “bunch of explosives” to where the “enemies” could be found and blowing himself up.

Law enforcement officers also located a series of instructions that had been published online by another terrorist group that gave specific, step-by-step instructions on how to build a pressure cooker bomb, which coincided with the delivery of the pressure cooker to Lepsky a short time before his arrest.  In addition, law enforcement officers recovered a message forwarded by Lepsky from another ISIS supporter stating that if a westerner could not travel to Syria to fight for ISIS, he could conduct a terrorist attack in his home country using improvised explosive devices.

At his plea hearing, Lepsky admitted that beginning in January 2017, he began to formulate a plan to detonate the pressure cooker bomb in New York City on behalf of ISIS.  Lepsky admitted that he used the internet to access ISIS directives, obtain bomb-making instructions, and purchase the pressure cooker and other items to be used in the attack.

In addition to the term of imprisonment, Judge Shipp imposed a life term of supervised release.

Assistant Attorney General Demers and U.S. Attorney Carpenito credited the FBI and the Joint Terrorism Task Force, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark; the N.J. State Attorney General’s Office, under the direction of Attorney General Gurbir S. Grewal; the Ocean County Prosecutor’s Office, under the direction of Prosecutor Bradley D. Billhimer; the Point Pleasant Police Department under the direction of Chief Richard P. Larsen and the N.J. Office of Homeland Security and Preparedness under the direction of Director Jared Maples, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney James Donnelly of the U.S. Attorney’s Office Criminal Division in Newark and Trial Attorney Justin Sher of the National Security Division’s Counterterrorism Section.

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Author: March 1, 2019

Maryland Gang Member Sentenced to 25 Years in Prison for Federal Racketeering, Drug Conspiracy and Gun Charges

A Baltimore, Maryland man was sentenced today to 25 years in prison, followed by five years of supervised release, for conspiring to participate in a drug distribution conspiracy and a violent racketeering enterprise known as Trained To Go (TTG).  The racketeering conspiracy included eight murders, as well as drug trafficking and witness intimidation. 

Brandon Wilson, aka Ali, 24, was sentenced by U.S. District Judge Catherine C. Blake in the District of Maryland.  A federal jury convicted Wilson and seven co-defendants on Oct. 31, 2018.  Wilson was convicted of RICO conspiracy, possession of a firearm in furtherance of a drug trafficking crime and of being a felon in possession of a firearm.  Wilson and his co-defendants were also convicted of a drug distribution conspiracy involving heroin, marijuana and cocaine.   

The sentencing was announced by Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; U.S. Attorney Robert K. Hur for the District of Maryland; Acting Special Agent in Charge Jennifer L. Moore of the FBI’s Baltimore Field Office; Acting Commissioner Michael Harrison of the Baltimore Police Department; Special Agent in Charge Rob Cekada of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Baltimore Field Division; Assistant Special Agent in Charge Don A. Hibbert of the U.S. Drug Enforcement Administration (DEA) Baltimore District Office; Anne Arundel County Police Chief Tim Altomare and Baltimore City State’s Attorney Marilyn J. Mosby.

According to the evidence presented at their 24-day trial, Wilson and his co-defendants are all members of TTG, a criminal organization that operated in the Sandtown neighborhood of West Baltimore, whose members engaged in drug distribution and acts of violence including murder, armed robbery, and witness intimidation.  As part of the conspiracy, each defendant agreed that a conspirator would commit at least two acts of racketeering activity for TTG. 

The evidence at trial showed that members and associates of TTG sold heroin, cocaine, and marijuana, and worked to defend their exclusive right to control who sold narcotics in TTG territory.  Specifically, the evidence proved that between May 20, 2010 and Jan. 9, 2017, Wilson, his co-defendants, and other members of TTG committed acts of violence, including eight murders, shootings, armed robbery, and witness intimidation.  Murders were committed in retaliation for individuals robbing TTG members of drugs and drug proceeds, or while TTG members robbed others of their drugs and drug proceeds, as well as in murder-for-hire schemes.  A gun recovered during a search of Wilson’s residence on Jan. 10, 2017, was determined to have been used in a Jan. 9, 2017 murder.  Further, the defendants engaged in witness intimidation through violence or threats of violence, to prevent individuals from cooperating with law enforcement.

The leader of the gang, Montana Barronette, aka Tana, and Tanner, 23, of Baltimore, was sentenced to life in prison on Feb. 15.

The remaining defendants convicted at the trial are all from Baltimore, and face a maximum sentence of life in prison on the racketeering and drug conspiracy.  They include: Terrell Sivells, aka. Rell, 27; John Harrison, aka Binkie, 28; Taurus Tillman, aka Tash, 29; Linton Broughton, aka. Marty, 25; Dennis Pulley, aka Denmo, 31 and Timothy Floyd, aka Tim Rod, 28.  The defendants remain detained.

Three other TTG members, previously pleaded guilty and were sentenced to between five and 25 years in prison.  Another defendant, Roger Taylor, aka Milk, is a fugitive.

The investigation was conducted by the FBI Baltimore Safe Streets Violent Gang Task Force, which includes FBI special agents and task force officers from the Baltimore, Baltimore County, and Anne Arundel County Police Departments.  FBI Baltimore Safe Streets Violent Gang Task Force is responsible for identifying and targeting the most violent gangs in the Baltimore metropolitan area, to address gang violence and the associated homicides in Baltimore.  The vision of the program is to use federal racketeering statutes to disrupt and dismantle significant violent criminal threats and criminal enterprises affecting the safety and well-being of our citizens and our communities. 

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.  The Department of Justice reinvigorated PSN in 2017 as part of its renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally based strategies to reduce violent crime.             

Wilson is still facing charges for allegedly assaulting employees of the U.S. Marshals Service (USMS) while he was detained and being transported to and from the courtroom during their trial.  The indictment alleges that on Oct. 31, 2018, Wilson assaulted two Maryland Department of Correction officers in the Chesapeake Detention Facility as they attempted to search Wilson prior to his being transported to U.S. District Court for the continuation of his trial. 

An indictment is merely an allegation, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.  The U.S. Marshals Service is investigating the case.

The investigation was conducted by the FBI, the Baltimore Police Department, the ATF, the DEA, the Anne Arundel County Police Department and the Office of the State’s Attorney for Baltimore City.  This Organized Crime Drug Enforcement Task Force case is being prosecuted by Special Assistant U.S. Attorney John C. Hanley, formerly of the Justice Department’s Organized Crime and Gang Section and Assistant U.S. Attorneys Daniel C. Gardner and Christopher J. Romano of the District of Maryland.

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Author: March 1, 2019